DISCUSSION
Is Blue Apron smart to pin turnaround hopes on Weight Watchers alliance?
Written by Tom Ryan
Photo: Blue Apron
Blue Apron, the meal kit pioneer, is hoping that a new partnership with WW Inc., formerly known as Weight Watchers International Inc., will help stabilize its business.
Under the program, Blue Apron will collaborate with WW’s nutrition and wellness experts to design a weekly rotating selection of recipes inspired by the WW Freestyle program, which allows WW members to eat certain foods (such as chicken, fish and beans) without counting calories.
For Blue Apron, the deal provides access to WW’s 2.8 million members in North America.
“Historically, we’ve been going out and acquiring one customer at a time,” Blue Apron CEO Brad Dickerson told The Washington Post. “This is a great way for us to get our brand in front of multiple customers at a time.”
WW earns a fee for every subscription it secures. The cost is the same as Blue Apron’s existing two-person plan that includes three recipes delivered weekly for $59.94, equaling $9.99 per serving.
Blue Apron, which went public in 2017, saw its stock price recover slightly on news of the WW deal, but is still trading barely over $1.00 as the meal-kit category hasn’t grown as much as expected. In the third quarter, Blue Apron’s subscriber base fell 25 percent year-over-year to 646,000.
The category has suffered from saturation with numerous other startups such as HelloFresh as well as retailers such as Kroger, Albertsons and Walmart coming out with offerings. On the demand side, Blue Apron has found that many customers want more flexibility than the locked-in subscription model.
In November, Blue Apron set a turnaround plan that included focusing even more on the top 30 percent of its customers who generate more than 80 percent of the company’s net revenue. Much of Blue Apron’s losses have stemmed from heavy marketing costs, including free trials to reach new customers.
A second initiative is to partner with retailers with on-demand offerings, including selling through Jet.com and Costco.
For WW, the partnership follows a rebranding in September that broadened its approach to helping people “reach all their wellness goals, not just weight loss.”