Recently Blue Apron Share your thoughts on the S-1 prospectus. Blue apron is a meal kit delivery company that has been established for less than five years online retailers , about $15-17 IPO , estimated at 3.2 billion yuan, the code will be APRN. "Meal kit delivery" doesn't have a good Chinese translation. It can be temporarily translated into "clean vegetable distribution e-commerce", but its mode is different from that of "my kitchen" and "young food king" in China.
The blue apron, what a small, fresh and naughty name, I can almost make up for the beautiful scene that hard-working and intelligent wives put on aprons and thrashed around the kitchen stove.
1. Business model
The pattern of the blue apron is very simple. You can understand it in a few words. Once you came home from work to cook, you had to think about what to eat and how to do, and you had to go to the trouble to buy and wash vegetables; Now you pay to become a minister under the skirt, so you go home directly after work, and there will be a box at the door with a blue apron painted on it. Open it and see:
Of course, the above is the seller show on the official website. The picture is too beautiful and beautiful. What you actually get is as follows:
You may be shocked if you have ever used "Youth Cuisine King" or "My Kitchen": What? This guy doesn't even cut it?
So, please note that the blue apron is not the so-called "clean vegetable delivery". "clean vegetable delivery" can save you time. Somehow, someone else has already cut the vegetables for you. However, the blue apron is not as low as that of a vegetable cutter. Its product is "unique cooking experiences", which is designed to give you the illusion that you have excellent cooking skills; In addition to these newly plucked ingredients that need your knife work, the box also contains the recipe and cooking guide of this dish.
The blue apron is not instant noodles. A meal must be made from sweat. (S-1 said that it would take about 45 minutes for each meal, but it would take several hours for me to do so.)
This model itself is not worth making a fuss, but how this model can make money is worth making a fuss. Seen from S-1, the blue apron believes that the essence of its mode is: disintermediation, cutting off the middleman）， Use O2O technology to castrate the upstream and downstream, and smash the middleman's job. Let's figure out who she can destroy: second dealers, warehousing and transportation, supermarket food market, nutrition experts (weight loss masters), food programs, recipe publishers, etc.
But this so-called disintermediation model is actually a bit of a drag. Isn't your blue apron a big media, and the real disintermediation should not be the farmers' uncles who send me direct mail with their industrious hands with their vicissitudes of life? (It seems that he has suddenly understood the way to solve the problem of agriculture, rural areas and farmers in China.)
In fact, the price of the blue apron is not cheap. The price of the set meal for two people is 9.99 dollars per person (six recipes are optional), and the price of the family set meal for four people is 8.99 dollars per person (four recipes are optional). You need to order another red wine, a bottle of ten dollars. People with life experience in the United States know that this is not economical, and they can't talk and laugh with cheap and "beautiful" Chinese restaurants.
In 2016, 78% of the orders came from the two person package, and 22% of the orders came from the family package. At present, Blue Apron has three core businesses: non-stop food delivery service, red wine distribution and Blue Apron Market. S-1 does not disclose the revenue share of each business, but I estimate that the latter two can be ignored.
2. Financial performance
BB has so many models and feelings, it's time to put on the financial statements. Although I am a law major, I firmly implement the "presumption of guilt" in investment, that is, unless there is sufficient evidence to prove that you are a good company, I will first assume that you are a bad company, and I will repeatedly rub your financial statements with suspicious eyes.
Take a look at the financial performance of the last nine quarters (the following picture, click to view the large picture) 。
As an Internet company with rapid growth and high losses, since you have the face to IPO, your operating income must have a good face. From 48.5 million yuan in Q1 in 2015 to 245 million yuan in Q1 in 2017, the compound growth rate of QoQ is 22%, which is a long journey.
But don't take a closer look. A closer look immediately embarrasses the terminal cancer.
The growth of net revenue slowed down significantly.
The growth of the number of customers and orders slowed down significantly.
Whether it is net revenue (which has reduced any promotional discounts and free credits to customers), the number of customers or the number of orders, the growth in the past year or more is somewhat weak. Investors who are interested in IPO will surely ask: What's wrong with you? It's not enough sales, publicity and free gifts? Or is the market saturated, or is the competitor too fierce?
Let's see how the management answered this question in S-1: not a word.
However, in any case, the sales strength should not be questioned. There was no sign of decadence. The sales expenses increased from 17.2% of the net income in Q1 2015 to 24.8% in Q1 2017, from 14 million dollars in 2014 to 144 million dollars in 2016 to 61 million dollars in Q1 2017.
In addition, the growth rate of these indicators also reflects a strong seasonality. Every year, it is the strongest quarter in the first quarter, and the following quarter is inferior to the first quarter, which is mentioned in S-1. The management thinks that the customer engagement of the company is generally the best in the first quarter, but when it comes to summer or the holiday season at the end of the year, people live in a rough life and cook less at home (there is less routine in the original words). Personally, I think the management did not seriously answer this question. Cooking at home should not be so seasonal. One possible reason for seasonality may be that people are more willing to go to the supermarket to smell the festive smell of cinnamon after the festival.
The following picture was originally put in S-1 by management to show off: you can see that for every 94 dollars of customer acquisition cost, I can get a customer worth 939 dollars in three years, 10X LTV/CAC.
But after seeing this picture with slots all over my body, I was even more worried. New customers can contribute $410 in net income in six months, but only $196 in the next six months, $119 in the next six months, and $70 in the next six months
It can be seen that the main income of the blue apron comes from new customers, and the more loyal old customers stay, the less they spend. Therefore, it can be inferred that customer defection should be a common occurrence (the so-called churn rate is very high). This shows that the blue apron provides a kind of service of taste and aesthetic fatigue. Customers are ready to rebel against revolution, which is a fatal thing for any O2O company. Why? Because these fickle customers are bought with money, commonly known as customer acquisition cost.
The blue apron said that her customer acquisition cost was 94 dollars. I would like to express my doubt. First of all, the cost of customer acquisition on S-1 (called cost of customer or CPC by the management, rather than customer acquisition cost or CAC in general) is calculated by dividing the sales expenses in 2014, 2015 and 2016 by the number of new customers in these three years. In 2014, the sales expense was 14 million yuan, while in 2016 it was 144 million yuan. The average figure calculated by this division will obviously be far less than the marginal cost of actual customer acquisition.
In 2017, Q1's sales expense was $61 million, while Q1's total number of customers increased from 880000 to 1.03 million, an increase of 150000; I don't know what the churn rate of the blue apron is, and S-1 didn't disclose it; Even if we assume that her annual churn is 20% of the heinous number (all the customers have run out in five years), then a quarter is 5%, we can roughly calculate that the number of customers in Q1 is 194000, and the CAC is 314 dollars. You can even assume that the more extreme churn rate (even 100%) has no customer retention rate, but the calculated CAC is much higher than $94.
So it's embarrassing. It's hard for customers to grow, the cost of getting customers is still so high, and customers are so easy to break ranks. In fact, the service seems to have no stickiness.
Then take a look at this.
The first line is the average value of each order, the second line is the average number of orders per customer in the quarter, and the third line is the average revenue contributed by each customer. These three sets of data, regardless of the vicissitudes of life, are almost unchanged.
It was also an embarrassment. Even if the blue apron was added to the red wine distribution in Q3 2015, the value of each order and even the average number of orders remained unchanged. In fact, it is very hard to make others pay more for dinner. So the only way to increase revenue is to increase the number of customers; But customer growth is so ceiling.
Some people may say, "What about economies of scale? If I have more clients, my profit margin will be higher. It is still possible to make money.". Congratulations, the management of the blue apron thinks the same way. S-1 says, "We expect these expenses to increase in dollar amount to support our growth, we expect such expenses to decrease as a percentage of net revenue over time as we continue to scale our business.）
But the fact is that the scale effect does not exist from the change of gross profit rate for more than one year. What's more, with the gross profit rate of 30%, you can't afford to let a young man who has achieved 55% gross profit rate but still died in battle.
The blue apron, which has achieved 70% of the market share in this segment, still can only give such results. The reason is that the industry threshold is too low, the competition is extremely fierce, the switching costs of consumers are extremely low, and this business is always frightened by the shadow of those retail giants.
3. Conclusion
I was looking forward to seeing the S-1 of the blue apron, but I was disappointed after reading it. I thought innocently that just like Uber killed a taxi, this guy is going to kill takeout and supermarket. However, the relentless figures do not seem to describe this revolution to me, at least in the short term. It's the other side Amazon High profile purchase Whole Foods , people are worried about whether the life of the blue apron will be taken off first.
There is not enough evidence to prove that the blue apron is a good company and good business, so I decided to implement the "presumption of guilt", presuming that it is a bad company and bad business. Thinking about the young food masters, delicious 77, fresh food fairs and so on, I closed the prospectus of the blue apron and sighed.
The author does not hold APRN stock positions.
This article is hasty. If there are any shortcomings, please forgive me.
Article from Snowball
Author: Chen Da
