In a piece in 2015 and another in 2016 I made the case that meal kit companies like Blue Apron had the economics all wrong. I argued that “incumbent grocery stores and restaurants have huge competitive advantages in being the providers of meal kits” and that “meal kits belong on a their own platform, with something like Amazon”. With Amazon’s plan to buy whole foods, this makes them an ideal provider that combines both: a platform and an incumbent grocery store.
And sure enough, that appears to be their plan, as Tech Crunch has recently reported:
“Based just on trademark filings and reported plans, Amazon’s potential entry into the prepared meal kit market has had a significant impact on freshly-IPO’d Blue Apron’s stock price. Now, however, we know that Amazon is actually already testing its own “Amazon Meal Kits,” thanks to a customer in Seattle who has already ordered and prepared one.”
Now Amazon will have a platform for meal kits and also the food distribution network of Whole Foods. There are few things that Amazon sells that Amazon exclusively makes, and so I would expect that next they will be partnering with other meal kit upstarts to start doing the distribution for them. Maybe restaurants as well.
This is not to say that Blue Apron won’t survive, and that there won’t be a handful of large meal kit companies operating like them. But I don’t think they will dominate the market. And do you know who else agrees with me that Amazon and Whole Foods are bad news for incumbent meal kit players? The stock market. After the news of Amazon’s new meal kit offering was released, Blue Apron’s stock plunged by as much as 11%.
Meal kits make sense. But they have more in common with restaurants and grocery stores than with Blue Apron.