Here's the biggest reason people aren't using meal kits like Blue Apron (APRN)

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Meal kit delivery companies like Blue Apron claim to help people save money on groceries, but potential and ex-customers are citing the cost of the services as a major concern.

According to a new poll by Morning Consult and Money Magazine, 49% of respondents who canceled a meal kit service cited the cost (starting at $8.99 per serving) as the biggest reason for their cancellation. Additionally, cost was the biggest issue for 59% of respondents who have never tried a meal kit service.

The cost of the meal kit service was the number one factor for both potential and ex-customers by a wide margin. Not liking the recipes (13%) and unavailability in their area (15%) were the second biggest factors for those who canceled their service and those who have never tried a meal kit service.

When it comes to popularity, Blue Apron led the pack among meal kit companies with 43% of those who tried a meal kit service saying they used Blue Apron. That was followed by HelloFresh with 33% and Plated with 20%.

While this is seemingly good news for Blue Apron, the company is not only struggling with a disappointing initial public offering, but also customer-retention.

The leading meal kit delivery service is losing money on roughly 70% of the customers it attracts, according to analysis by Daniel McCarthy, an assistant professor of marketing at Emory University.

"Even though Blue Apron turns a profit on the remaining 30% of customers, the break-even point is moving farther away with every new cohort due to declining revenue and growing [customer acquisition cost] for newer customers," writes McCarthy.

Blue Apron acknowledged this issue in its IPO prospectus, saying, "If we fail to cost-effectively acquire new customers or retain our existing customers, our business could be materially adversely affected."

The company's IPO has not gone well either. Blue Apron shares are down 36% since their June 30 debut and news that Amazon is launching its own subscription meal-box kits certainly won't help the company going forward.

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SEE ALSO: Amazon might be setting its sights on the restaurant industry

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Contributer : Tech Insider http://ift.tt/2gNEeRR
Here's the biggest reason people aren't using meal kits like Blue Apron (APRN) Here's the biggest reason people aren't using meal kits like Blue Apron (APRN) Reviewed by mimisabreena on Friday, July 21, 2017 Rating: 5

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