{"id":4532,"date":"2015-12-09T15:56:16","date_gmt":"2015-12-09T20:56:16","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/blue-apron-bringing-economical-exotic-meal-experiences-to-door-step\/"},"modified":"2015-12-09T15:56:16","modified_gmt":"2015-12-09T20:56:16","slug":"blue-apron-bringing-economical-exotic-meal-experiences-to-door-step","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/blue-apron-bringing-economical-exotic-meal-experiences-to-door-step\/","title":{"rendered":"Blue Apron:\u00a0Bringing economical exotic meal experiences to door-step"},"content":{"rendered":"

\"Picture1\"<\/a><\/p>\n

\u201cWe want[ed] to disrupt the traditional grocery chain model and show consumers that there is a better way to cook with fresh, seasonal ingredients\u201d – Matt Salzberg [HBS 2010], founder and CEO, Blue Apron<\/p>\n

\"Picturex\"<\/a>
Blue Apron: Pre-portioned ingredients that can be prepared into exotic meals<\/figcaption><\/figure>\n

Many would know Blue Apron\u00a0for\u00a0its innovative business idea in the meals-commerce segment. However, its meteoric rise (valuation of ~$2Bn in <4 years)\u00a0in the food-tech space has been powered as much, if not more, by its well-aligned operating model as by its business idea.<\/p>\n

Business model:<\/strong><\/p>\n

At the core, Blue apron is in the business of meal kit subscriptions. It offers pre-portioned farm-fresh ingredients\u00a0delivered to doorstep on-demand, for cooking ‘original’ recipes (it created), all at $10 per meal. More broadly, Blue Apron is an experience of dawning the chef hat and preparing\u00a0and eating exotic meals conveniently. In\u00a0October 2015, Blue Apron served 5M+ meal kits, 10x of what it served exactly 18 months back.<\/p>\n

\"1\"<\/a><\/p>\n

Operating model:<\/strong><\/p>\n

Fundamental to Blue Apron\u2019s meteoric rise is its strong operating model focusing on:<\/p>\n

    \n
  1. Original non-repeat menu:<\/strong>\u00a0Blue Apron\u00a0operates a ‘no-repeat’ menu model to deliver an exotic meal experience. It\u00a0sources new recipes both in-house and as well as through external partnerships. It recently partnered with Top Chef competition to source exotic, winning recipes. To source recipes in-house,\u00a0Blue Apron follows a rigorous process. First, the recipe team brainstorms culinary ideas, bringing inspiration from restaurants, cookbooks, etc. Once an idea is shortlisted, it is tested through a simulated cooking experience at a house kitchen. A recipe is picked or dropped depending on the time, skills and tools required to prepare it.\u00a0This process has generated 800+ original recipes over past 3 years.<\/li>\n<\/ol>\n
      \n
    1. Vertically integrated sourcing:<\/strong> Exotic recipes call for exotic ingredients. To source quality, seasonal ingredients,\u00a0Blue Apron\u00a0has integrated vertically to buy\u00a0directly from farms and family-run purveyors. It ordered 3 million pounds of produce from 100 family-run farms past summer. By by-passing the middlemen, Blue Apron has direct access to better quality\u00a0and\u00a0fresher ingredients. Besides, the vertical integration\u00a0reduces costs (commission\u00a0paid to middlemen).\u00a0\u00a0Blue Apron passes on these savings to\u00a0customers.<\/li>\n<\/ol>\n
      \"How<\/a>
      How direct-from-farmer sourcing and pre-portioned packaging makes purchasing from Blue Apron less expensive than purchasing from grocery stores<\/figcaption><\/figure>\n
        \n
      1. In-house fulfillment centers:<\/strong> Blue Apron has 3 fulfillment centers, one each at NJ, CA and TX. At these centers, fresh raw materials cultivated at nearby farms are loaded. Using it’s flexing packaging process designed in-house, employees\u00a0portion and package\u00a0varying amounts of ingredients depending on the week\u2019s recipe. Once individual\u00a0ingredients are portioned and packaged, they are paired\u00a0together by meals in Blue Apron boxes and distributed to nearby cities. Blue Apron attempts to mimic this\u00a0entire process from farm to consumer as Just-in-Time. The flexible portioned packaging and JIT enables 2 key consumer experiences – fresher ingredients and lesser wastage (cost reduction) \u2013 compared to consumers attempting the same process from a nearby grocery story. Further, by keeping fulfillment in-house (against outsourcing), Blue Apron better controls these key\u00a0end-consumer experiences.<\/li>\n<\/ol>\n
        \"Picture5\"<\/a>
        Employees at Blue Apron’s fulfillment centers creating portioned packages<\/figcaption><\/figure>\n
          \n
        1. Use of technology:<\/strong> Blue Apron effectively leverages technology across both front-end and back-end to deliver enhanced consumer experiences. At the front-end, Blue App has a simple app that acts as a user\u2019s cooking companion. A consumer can place order, see detailed recipes, check video tutorials, get tips and use a cooking stopwatch through this app. Additionally, the app has a\u00a0social media sharing option with Instagram-like filters to enable consumers to share pictures of their meals. Essentially, the app enables end-to-end meal experience, right from cooking, to eating, to photographing, to sharing. Besides, the app provides useful customer data points to understand what recipes worked and allows Blue Apron\u00a0to close the loop with the customer.\u00a0At the backend, Blue Apron uses a homegrown warehouse management software to track order flow and productivity, to manage its JIT operation. It has also invested in algorithms that help predict a recipe\u2019s popularity, which can help in making better sourcing decisions.<\/li>\n<\/ol>\n
          \"Picture6\"<\/a>
          Complete app-experience: consuming content, photographing\u00a0and sharing meal experiences<\/figcaption><\/figure>\n

          Conclusion: <\/strong>Blue Apron is tapping the latent demand for convenient meal alternatives\u00a0through its innovative business model and strong operating fundamentals. It recently extended its\u00a0offerings beyond meals to wines. If it continues to grow at the same pace and connect consumers\u00a0more effectively (in quality, cost and convenience) with farms, it can challenge the existence of grocery stores and will be\u00a0well-positioned to take\u00a0a significant pie of the huge $1.1Tn food industry!<\/p>\n

           <\/p>\n

          Sources:<\/strong><\/p>\n

          http:\/\/techcrunch.com\/2015\/07\/15\/blue-apron-cooking-reference-here-an-ios-app\/#.1g5fuv:hCgd<\/a><\/span><\/p>\n

          http:\/\/www.wsj.com\/articles\/meal-delivery-startups-look-for-winning-recipe-1406162891<\/a><\/span><\/p>\n

          http:\/\/www.forbes.com\/sites\/alexkonrad\/2015\/10\/14\/inside-blue-apron-and-the-meal-kit-rush\/<\/span><\/p>\n

          http:\/\/www.foodtechconnect.com\/2013\/12\/04\/blue-apron-ceo-business-model-scaling-distribution-sourcing\/<\/a><\/span><\/p>\n

          http:\/\/money.cnn.com\/video\/technology\/innovationnation\/2015\/01\/21\/blue-apron.cnnmoney<\/a><\/span><\/p>\n

          http:\/\/www.foodlogistics.com\/news\/12019754\/blue-apron-opens-new-jersey-fulfillment-center-ingredient-recipe-service-delivers-more-than-1-million-meals-monthly<\/a><\/span><\/p>\n

          http:\/\/www.fastcompany.com\/3023150\/most-creative-people\/how-blue-apron-helps-aspiring-home-cooks-get-their-chef-on<\/a><\/span><\/p>\n

          http:\/\/www.instyle.com\/news\/get-your-top-chef-blue-apron-home-delivery<\/a><\/span><\/p>\n

          http:\/\/4richmond.org\/blue-apron-adds-400-jobs-to-richmond-fulfillment-center\/<\/a><\/span><\/p>\n

          http:\/\/blog.blueapron.com\/blue-apron-costs-less-than-shopping-yourself\/<\/a><\/span><\/p>\n

          https:\/\/rivalfox.com\/blog\/the-fresh-ingredients-delivery-services\/<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

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