How much does it cost Blue Apron to land a new customer? About $500. How much is an average customer worth? About $400 in the lifetime of the relationship. Blue Apron loses $100 on every customer.
This explains why Blue Apron’s stock price has tanked since its IPO.
“If you wake up on a Casper mattress, work out with a Peloton before breakfast, Uber to your desk at a WeWork, order DoorDash for lunch, take a Lyft home, and get dinner through Postmates, you’ve interacted with seven companies that will collectively lose nearly $14 billion this year. If you use Lime scooters to bop around the city, download Wag to walk your dog, and sign up for Blue Apron to make a meal, that’s three more brands that have never recorded a dime in earnings, or have seen their valuations fall by more than 50 percent.”
With a lot of these businesses, you could see them being used by a bunch of single, 26-year-old New York and San Francisco condo-dwelling hipsters making $200K a year (i.e. the exact type of people who work for these same companies), but Joe and Jane Sixpack from Kentucky? Not so much.
So it seems we’re having, or about to have a day of reckoning for these sorts of “Dotcom 2.0” companies. WeWork is the most famous example, of late. Growth is out, profits are in.
The truth is, in business, nothing ever changes. But if the last five years are anything to go by, it seems that journalists are paid to make us forget that.