Blue Apron Shows Why You Must Focus On Market-Fit, Not Just Pandemic-Fit

Is your business market-fit or just pandemic fit? Blue Apron, a meal-delivery company, is turning out to be a more pandemic-fit company than one which can thrive during normal times. The stock lost 25% of its value on trading today. Yet the main issue may be the sale sign it took off, according to Barron’s, “Blue Apron Holdings stock has lost more than a quarter of their value on Thursday after the meal-kit provider announced the end of a strategic review launched earlier this year, and that it is not pursuing a sale or other strategic transaction.”

Blue Apron, boosted by Americans eating in amid the pandemic, has become a victim of its own success. The meal-kit delivery company saw customers drop off by 7.5% during the third quarter as it struggled to meet an earlier surge in demand. While it’s expanding fulfillment centers and paring menu options to simplify production lines, those changes won’t be completed until next year. The New York-based startup, which went public in 2017, was one of the early business winners amid the contagion that took hold in March.

The numbers did not give Wall Street confidence and they moved in droves.

Blue Apron reported 357,000 customers in the quarter, down from 386,000 a year ago and 396,000 in the June quarter. Orders were 1.92 million, up from 1.73 million a year ago, but down from 2.2 million in the June quarter. Average order value per customer was $58.56, up from $57.60 a year ago, but off from $60.88 in the June quarter. Average revenue per customer was $314, up from $258 a year ago, but off from $331 in the June quarter.

You cannot afford to be pursuing pandemic-fit opportunities, losing insights on the durable market-fit ones. You need to think long-term even as you take care of today’s opportunities. When pandemic hit, many investors saw this company as a winner as many, locked out at home, ordered their services. But now that the world is open, customers are abandoning the company.  I do think Blue Apron should sell to Amazon and call it a day.

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