The old meal kit model is dead, and Blue Apron is proof that meal delivery companies need more than just an online presence to survive.
Blue Apron has struggled to hold onto customers amid growing competition and distribution issues. While it was able to grow subscribers by 5 percent from last quarter, the number of customers buying from the brand is down 24 percent from the prior year.
Meal kit users are notorious for ditching their subscriptions within six months of starting them and either jumping to another brand or returning to their old grocery habits. Meal kit companies have taken to heavily discounting their products to lure in new diners or rewarding current members for turning their friends onto the program.
However, the days of ordering three meals online and waiting a week for them to arrive at your doorstep could be coming to an end. Meal kit companies need to adapt and offer a wider variety of options, including being able to pick up a meal at a grocery store, food industry expert Phil Lempert told CNBC.
"It's not a sustainable business if you've got to be constantly giving away $30 or $40 worth of meals to get customers," Lempert said. "I do think what Hello Fresh and Blue Apron are doing, where they are starting to sell in supermarkets, that's the opportunity."
Blue Apron has struggled to grow its base and build loyalty so that the company can spend less on marketing. While the company was able to shave its marketing budget in the first quarter to 20 percent of its revenue, down from the 24.8 percent of revenue in the fourth quarter, customer acquisition remains elusive.
Convenience and choice are key reasons that customers love meal kits, but bulky packaging, high delivery costs and competitive discounting across the industry are leading users to bounce from brand to brand without staying for long.
Having meal kits in supermarkets decreases the amount of packaging, and customers no longer have to pay to have the food shipped. And it offers consumers the convenience of spontaneously deciding they want to purchase a kit, rather than planning a week ahead.
Blue Apron currently has a pilot program with Costco. It is also testing out pop-up stores to better engage with customers.