Blue Apron, the American home delivery service which has experienced volatility since Amazon purchased rival Whole Foods a few days before their IPO, has lost their chief executive. Matt Salzberg, the founder of the business, will step aside as CEO, although he will retain his roles as chairman of the board and executive chairman of the business. This comes as Blue Apron disappointed investors with earnings of $210 million for the last quarter…for a five-year-old business.
Are we missing something?
Added to this, Blue Apron shares dipped below the three dollar mark on Thursday, and analysts continue to paint an incredibly gloomy picture.
But why?
The departure of Salzburg as chief executive, the tumbling share price and disenchanted shareholders are all interlinked. While the Amazon drama was a nice distraction, real concern lay in the fact that the business seemed to be moving in some strange directions, and senior leadership was making decisions that just didn’t make sense.
The major one was the new warehouse – state-of-the-art and incredibly efficient, it would enhance the customer experience at a very significant cost. But investors didn’t raise an eyebrow until senior leadership explained that they were going to pay for the warehouse by cutting marketing spent.
Blue Apron, not unlike any other consumer product is a product marketing business with logistics attached to it. To remove the marketing element in a highly competitive market (new home delivery start-ups are launched every day, and constantly erode market share) was not only an odd move but clearly counterintuitive to the overall business model.
The new CEO will be Brad Dickerson, the current CFO; and the choice is a wise one. Dickerson came to Blue Apron from Under Armour, where he spent more than a decade acting as the safe pair of financial hands for a business that – like Blue Apron – relied heavily on marketing and positioning in a competitive market. Dickerson will bring more than just financial nous, he will offer an understanding of strategy, marketing and how to tackle businesses that aren’t above giving things away (free offers are prevalent in the industry) to steal customers from the competition.
With the Amazon kerfuffle in the past, it’s time for Blue Apron, to look to the future and do so under the stewardship of Dickerson, who is likely the right man for the job.