Blue Apron’s (NYSE:APRN) Problems Endures Despite Reporting Revenue Growth Amid COVID-19 Pandemic

 Blue Apron (NYSE:APRN) is one of the companies that have performed well during this coronavirus pandemic. The meal-kit company saw a surge in demand for ready to cook food in the quarter that ended in March as the coronavirus spread across the US.

Despite the business benefitting from the current crisis its underlying problems still exist and the business does not grow. Although there has been growth in operations, that is yet to translate into profitability. Worse still even of the company could finally achieve an economy of scale it could still face competition from well-positioned competitors.

Blue Apron posting losses despite revenue growth

For the company it appears as if its revenue growth has already peaked. In 2017 when the concept was fresh people tried the company but were not impressed.  Analysts are predicting that growth could rebound as from next year following enhanced marketing efforts and revenue was beginning to grow this year even before the pandemic stuck.

However with growth it means more losses and the company’s narrowing net loss between 2017 and 2019 was largely due to declining sales. However, in Q3 the company’s net losses began widening and despite the company posting revenue growth in the past quarter its net loss is still considerable.

Blue Apron’s business model not yielding

The other concern for the company is its business model that is flawed. For instance groceries are usually low margin businesses and if you include the cost of packing them into a box, delivering the box and advertising the box to appeal to customers to turn from conventional grocery stores seems to drag Blue Apron into the red.

However the company could manage to negotiate better prices going forward maybe from farming its ingredients. Although the acquisition costs of customers are high if the company manages to get repeat customers then it will have to spend less in trying to get new customers.

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