Blue Apron Cuts Marketing Spend As Customers, Orders Decline

direct-to-consumer brands

Blue Apron Cuts Marketing Spend As Customers, Orders Decline

by , November 8, 2022

Blue Apron Cuts Marketing Spend As Customers, Orders Decline

D2C meal-kit delivery provider Blue Apron Holdings’ bid for growth and profitability is facing stiff headwinds in the form of a declining customer count and uncertain financial liquidity.

Although price increases helped the company raise its average order value in the recently ended third quarter—to $70.83 from $67.14 in Q2—the total number of customers fell by 7.4%.

In the period ended Sept. 30, Blue Apron had 323,000 million customers compared to 349,000 in Q2.

Meanwhile, total Q3 orders dropped to 1.55 million from 1.70 million in the second quarter.

As revenue declined by nearly 12% in the recent quarter—leading to a net loss of $25.8 million—Blue Apron decided to cut back on marketing by 21% compared to the second quarter, according to president and CEO Linda Findley.

“We saw cost of marketing rise beyond sustainable levels, particularly in search marketing, and therefore we are adjusting spend in tactics accordingly,” Findley said on an earnings call (November 23, 2022).

She was asked for an update on Blue Apron’s recent debut of Amazon availability without a subscription, and its June launch of non-subscription ordering on Walmart.com.

“Part of what we are seeing is some people do continue to want to buy non-subscription even if they’re buying every week—that’s just something that they prefer to do rather than committing to a subscription,” said Findley. “And then others are seeing the value of the subscription and potentially converting into it. But it is still very early.”

Blue Apron digital gift cards are now available on Coscto’s website.

“This allows us to bring a gift option to their customer base at a great value, especially as gift experiences are growing in popularity,” said Findley.

Facing a liquidity crunch, Blue Apron sold 4.6 million shares of common stock last month to raise $14.5 million.

In September, the company entered a private placement agreement with one of its early investors, Joseph Sanberg, that was expected to raise $56.5 million, but that deal has changed course.

According to Findley, Blue Apron now has “a security interest in certain securities of private companies” affiliated with Sanberg “with the value estimated to be significantly in excess of the $56.5 million owed.”

As revenue declined by nearly 12% in Q3, Blue Apron decided to cut back on marketing by 21% compared to the second quarter.
 

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