If you’ve never heard of Blue Apron, it’s a meal delivery service that brings the ingredients to your door for you to cook. Blue Apron also listed on the New York Stock Exchange (NYSE) in June to a lukewarm reception. However, it had been able to achieve slow yet consistent growth in the weeks since, especially considering the news from Amazon just a few days prior to the IPO.
Just before the listing, Amazon purchased Whole Foods, signalling its entry into the online food retail market, and Blue Apron paid the price with its IPO’s expected range moving from close to $20 to just $10. Blue Apron executives then worked hard to assure Wall Street that firstly, the market is big enough for a diverse group of major players, and secondly that Amazon would be unlikely to enter the market with an offering in direct competition to Blue Apron.
In July, Amazon filed a trademark application for “prepared food kits.” Blue Apron took an 11% hit it could not afford, and analysts turned even more bearish on the stock. Executives, however, maintained their optimistic stance – after all, they had little choice – and told investors that Amazon wouldn’t move quickly without significant research, and even then, the kits would likely be completely different from the Bue Apron offering.
Now, Amazon has launched “Kits,” a fresh food delivery service that offers enough ingredients to prepare meals for 2 to 4 people at a slightly lower cost than Blue Apron. The beleaguered stock now sits at just over six dollars, nearly 40% below its already low IPO valuation.
But even that isn’t the end of the bad news for Blue Apron, which many analysts predict to fall even further. There are few on the street who are bullish about the stock, and most have predicted a floor of between $1.50 – $2.00. Nothing short of a disaster.
This, yet again shows the power of Amazon to transform industries and destroy businesses. Any optimism investors had for Blue Apron was destroyed by the Whole Foods acquisition, but the fact that even the possibility of Amazon entering a market could have such an incredibly detrimental effect on a business is incredible. With the business showing no signs of slowing down its drive to diversify into new industries, it’s no wonder that businesses are cautious to invest and expand when Amazon starts evaluating acquisitions in their sector.
Amazon has also progressed its plans to expand into Australia, with Melbourne rumoured to be the first warehouse location for Amazon stock.