Ama­zon Fresh: The Blue Apron knock- off is live and kick­ing!

Technowize Magazine - - Features -

In the fall of 2016, Ama­zon.com, Inc. inked an in­ter­est­ing part­ner­ship with Tyson and launched Tyson Tastemak­ers “a line of chef in­spired meal kits.” come 2017 and Ama­zon is en­ter­ing the ring for a food fight. This July, re­tail gi­ant Ama­zon forged a part­ner­ship with Martha Ste­wart, where Mar­ley Spoon-pre­pared meal kits will be made avail­able to Ama­zon Fresh’s cus­tomers in New York, San Fran­cisco, Philadel­phia and Dal­las. The tagline of Ama­zon’s new kit is quite sim­i­lar to Blue Apron’s busi­ness model: “We do the prep. You be the chef.”

As the news of Ama­zon Fresh meal kits broke, Blue Apron’s went into a tail­spin at an all-time low of $6.45 within the trad­ing day – down 35 per­cent from its $10 IPO price. The grow­ing trend of star­tups sell­ing meal kits went un­no­ticed un­til re­cently when Ama­zon launched its own meal-kit com­peti­tor. com­pa­nies like Blue Apron, chef’d, hello Fresh and Planet have been in this busi­ness for long, of­fer­ing cus­tomers a box of in­gre­di­ents along with easy to fol­low cook­ing di­rec­tions. The beauty of this busi­ness is that ev­ery meal kit comes with in­gre­di­ents per­fectly mea­sures to each recipe. It is quite

la­bor in­ten­sive and is mostly done by hand. The meal-kits de­liv­ery mar­ket in the u.s. is big and is grow­ing at an un­par­al­leled rate. It made ap­prox­i­mately $1.5 bil­lion in sales in 2016 and is ex­pected to grow to $5 bil­lion over the next five years, ac­cord­ing to a re­cent re­port by mar­ket research publisher Pack­aged Facts en­ti­tled Meal Kit De­liv­ery Ser­vices in the u.s.

Let’s not com­pletely for­get that the meal kit in­dus­try has at­tracted a size­able fan­base of Mil­len­ni­als and gen­er­a­tion z who are a

per­fect au­di­ence for this kind of of­fer­ing. An­a­lysts be­lieve, meal kits have the po­ten­tial to be dis­rup­tive. The mar­ket for pre-pre­pared food is too small right now, and is es­ti­mated to have reached only 5 per­cent of u.s. house­holds.

We are now spend­ing less time in the kitchen than ever. Ac­cord­ing to a re­cent har­ris Poll, less than a third of all age groups from Mil­len­ni­als to oc­to­ge­nar­ian and older cook ev­ery day, and only 44 per­cent cook a few times per week. The meal kits in­dus­try is teach­ing peo­ple the value of food, nu­tri­tion

and cook­ing in a world where we only see more mar­ket­ing done for pre-made junk food.

Now, there’s the is­sue of cost. Each meal from a meal-kit de­liv­ery ser­vice costs around $10 to $16. The meal kits on Ama­zon Fresh are priced be­tween $8 to $14 per serv­ing. It’s only af­ford­able for fam­i­lies with a cer­tain amount of dis­pos­able in­come. If meal kits are in­tended to re­place meals, shouldn’t they be a lit­tle cheaper? Be­sides, peo­ple can al­ways or­der a meal from a restaurant or a deli and pay much less. The only stick­ing point right now is con­ve­nience. Meal kits come with pre-por­tioned in­gre­di­ents and dis­play step by step in­struc­tions. That goes with­out say­ing that some of the recipes re­quire more than sixty min­utes of prepa­ra­tion and clean up.

Let’s not deny that these meal kit com­pa­nies are based on an eco­nom­i­cal model that is far from sus­tain­able. Then there’s the is­sue of sus­tain­abil­ity – Mil­len­ni­als who are con­cerned with en­vi­ron­men­tal sus­tain­abil­ity might not agree with the kind of pack­ag­ing used and its im­pact on the en­vi­ron­ment. Be­sides, when you pre-or­der what you’re go­ing to eat to­mor­row or in the fu­ture, it re­moves some level of ex­cite­ment and fun at meal time. Many of these meal kit com­pa­nies of­fer ser­vices which re­quire a sub­scrip­tion, or multi-meal pur­chases, which is an­other big down­side. Very of­fer dis­counts such as “get 2 meals free” or “get 50% off your first or­der” when you sign up – and it makes one won­der how long will it take be­fore these ser­vice earn some real profit.

The meal kit in­dus­try is poised for un­par­al­leled growth. con­sumers re­port that pre-por­tioned meals are help­ing them eat health­ier, oth­ers feel the step-by-step in­struc­tions is a good

way to learn cook­ing, and oth­ers sim­ply love shar­ing the cook­ing ex­pe­ri­ence with their loves ones. Ac­cord­ing to a research con­ducted by BSR on food waste by Blue Apron, it was found that the fa­cil­ity threw 5.5% of food, while gro­cery stores threw out 10.5% of food. The study, how­ever, did not in­clude the ship­ping and pack­ag­ing waste foot­print.

There is strong ev­i­dence that points out that the meal kit

in­dus­try is gain­ing mo­men­tum. An­a­lysts at The Food In­sti­tute es­ti­mate the mar­ket could tap $3 bil­lion in 2018, and an even big­ger num­ber by the time we reach 2020. To­day, more Amer­i­cans care about nu­tri­tion from the food they eat than ever be­fore. get­ting the Mil­len­nial gen­er­a­tion to cook is go­ing to be a chal­lenge, nonethe­less it may be worth the ef­fort. We can­not ex­pect schools to re­in­state cook­ing ed­u­ca­tion as a part of the syl­labus, it might still be eas­ier to in­still the value of food and cook­ing to en­sure peo­ple know the ba­sics, to say the least.

It may be some time be­fore we see meal kits avail­able across all of the u.s. states, but the com­pe­ti­tion is al­ready feel­ing the heat. Be­fore Ama­zon Fresh was Blue Apron, one of the largest meal kit provider in the u.s., fol­lowed by hellofresh. The ques­tion is, how can Ama­zon Fresh stand out from a com­pany like Blue Apron or oth­ers – Plated, Mar­ley Spoon, Peach Dish, green chef, Sun Bas­ket, gooble, hellofresh, chef’d, and even tra­di­tional gro­cers. For all we can say right now, Ama­zon isn’t too con­cerned about mak­ing a profit on meal kits – and that’s one big is­sue many com­peti­tors are deal­ing with right now. Right now, Ama­zon’s short-term goal is to take a loss on meal-kits to draw more Prime mem­bers. For a $5 bil­lion profit be­fore 2020, it’s worth it, isn’t it?

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