A different kind of online grocery shopping company is in town with some significant partnerships and a market study to back them up. eMeals’ unique shopping model ̶ which is an app-based model that provides consumers with recipes every week and the option of having ingredients delivered to their doors ̶ was found to have financial sustainability advantages over meal kit companies such as Blue Apron, according to a new study presented by Dan McCarthy, Assistant Professor of Marketing at Emory University’s Goizueta Business School.
This study compared the economic health of eMeals’ subscription-based online recipe model with Blue Apron’s subscription-based pre-portioned ingredients model. According to McCarthy, eMeals’ model delivered a 152 percent return on investment per customer, whereas Blue Apron’s sales model delivered a one percent return. McCarthy’s analysis did not solely focus on revenue growth as a primary driver of financial value; instead, it assessed the company’s value by evaluating five customer-related drivers of economic health which include customer acquisition volume and cost, customer churn, order rate, basket size, and contribution margin.
From this data, McCarthy concluded that eMeals’ customer acquisition cost is 56 percent lower than Blue Apron’s and the company’s one-year retention rate and expected customer lifetime is double that of Blue Apron’s. The company also claims that their partners are 10 percent more profitable and that their contribution margin is 90 percent whereas Blue Apron’s is 28 percent.
These results might be due to the fact that eMeals’ unique business model is a lot more flexible than Blue Apron’s. Blue Apron is known to provide their customers with a choice of eight to ten recipes a week, pre-portioned ingredients and home delivery with total weekly costs being around $48-120. eMeal’s program, on the other hand, offers seven new dinner recipes for each of their 15 different eating styles and automatically generated shopping lists that can be self-shopped or sent out to AmazonFresh, Walmart, Kroger, Instacart or Shipt. In addition, eMeal’s meal program ranges from five to ten dollars a month.
Blue Apron has been facing a lot of competition in their category because of the oversaturation in the meal kits market. Earlier this year, the company lost their spot as the top-selling meal kit provider in the US to Hello Fresh. In fact, almost all meal kit providers experienced a decline in sales in 2017. Nevertheless, Blue Apron is trying everything they can do to stay afloat by introducing Whole30 diet-inspired recipes, announcing new sustainability initiatives and launching meal kits in stores.
“Every company in the traditional subscription-based meal kit industry confronts the same sort of unit economic headwinds that I identified in my Blue Apron analysis – a high cost to acquire customers, and to varying degrees, difficulty retaining existing customers and less than stellar margins. I do not believe selling meal kits in grocery stores will significantly change the per-customer profitability picture for these companies,” McCarthy said. “eMeals’ shoppable recipe model is a novel approach that delivers similar convenience to customers but removes most of the operational costs and inflexibility of the meal kit model, resulting in a striking difference in customer-level profitability.”
Considering the flexibility of eMeals’ program, it’s no surprise that more consumers are interested in their company. eMeals’ self-shop model allows consumers to take charge of their dinner plans and follow their own schedules and budgets. The company has also partnered with recognizable grocery shopping services such as AmazonFresh, Kroger and Walmart which add to their consumer trust and loyalty. Overall, eMeals’ business model is innovative, affordable, flexible and convenient which is why it is finding such success with consumers.
“Our business model lends itself to profitable unit economics, in large part because we rely on the existing grocery channel for fulfillment. Grocers and food brands also benefit because our subscribers do their food shopping either physically or online through our grocery partner integrations instead of receiving pre-packaged ingredients acquired from wholesalers,” said eMeals CEO Forrest Collier. “This study clearly validates our approach to the market, the sustainability of our model, and why we’ve been in business for more than a decade.”