Amazon recently announced that they were acquiring Whole Foods and many questioned what synergies and opportunities would be identified as result of this acquisition. The recent launch, in test markets, of a meal delivery service that Amazon is launching may not bode well for Blue Apron, a major player in this market.
Blue Apron has recently undergone an IPO in July and the announcement by Amazon has led to a big drop in their stock, as they are likely to struggle competing against a competitor with as many resources available to them as Amazon has. This month alone, Blue Apron’s stock has dropped 30%. The Company had a high valuation and has never earned a profit in their business which is leading many to question the valuations that Blue Apron had. Many large institutional companies had invested in Blue Apron including Bessemer Venture Partners and First Round Capital, and Fidelity. The price that these institutional investors got in at is unknown and the Blue Apron stock is currently down from their IPO price of $10 a share to approximately $6.50.
The slogan that Amazon has trademarked for their newly launched meal delivery system of “We do the prep, you be the chef”. Amazon has been successful in many different product lines that they have launched including diverse fields from Cloud Computing to the development of video content. They have been recently trying to enter the grocery market to combat other major competitors like Walmart, given the vast size of this market opportunity. It is easy to see the synergies that Amazon could develop in the meal prep business along with their current delivery service and capabilities.
Amazon has been accused of reaching towards monopolistic levels of power, partly as a result of their acquisition of Whole Foods. While regulation does not appear to be forthcoming a larger breakup of Amazon to smaller respective parts may be a possible future outcome if they continue to expand and dominate in the online marketplace.