How simplifying online grocery shopping leads to big business

January 13, 2015 11:53 AM

Simplifying online grocery shopping has led to big business for meal delivery startup Blue Apron Inc.

While founder Matt Salzberg won’t disclose sales figures, he says Blue Apron sells more than 1 million meals each month. Given that each meal costs $9.99 that would place the retailer’s annual sales at around $120 million.

 Since launching in 2012, the company has sold make-at-home meals such as Chicken Charlemagne and Korean-style Tteok designed for two people using locally sourced ingredients. To help increase its reach, the retailer last month added a family plan that can feed a family of four.

 “We certainly didn’t predict we were going to grow this fast in that short a period,” he says. While advertising on social networks and via paid search has contributed to Blue Apron’s growth, Salzberg says word-of-mouth is also helping attract new customers.

“Our customers are creating meals they’re proud of and they’re sharing them on social media,” he says.

The retailer’s growth has tested its supply chain. Because the menu of offerings is constantly evolving, Salzberg says Blue Apron doesn’t stockpile ingredients. That saves it the trouble of having a warehouse full of food that could potentially go bad. “Managing the supply chain for perishable food and getting it to the customer in an affordable and high quality way is very difficult,” he says.

Since its launch, Blue Apron has managed its own fulfillment infrastructure. The retailer has three distribution centers across the country to minimize the distance its meals have to travel. It also works with local farmers to ensure it has access to the ingredients it needs. Salzberg says the company develops menus based in part on seasonal products.

“As we’ve gotten bigger, a lot of it comes down to integrating yourself closer with your suppliers,” Salzberg says. “Working with those suppliers to be even more integrated and long term focused to ensure that we have access to ingredients that are only available to us and not available elsewhere.”

In addition to meals, Blue Apron recently began selling kitchenware on the Blue Apron Market section of its web site.




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