Walmart's Jet Helps Blue Apron's Biggest Problem: Planning Ahead

(Bloomberg) -- Walmart Inc.’s Jet.com is throwing Blue Apron Holdings Inc. a lifeline.

The retailer’s urban-focused website will begin to carry four different Blue Apron meal kits starting Monday to help boost its fledgling grocery business. Jet’s customers in the New York City area can make the meals part of their regular grocery order, without having to subscribe to Blue Apron’s service. The tie-up also aims to deliver more customers to the beleaguered meal-kit company, whose shares have plummeted since it went public last year.

Walmart's Jet Helps Blue Apron's Biggest Problem: Planning Ahead

The partnership brings new credibility to Jet’s grocery ambitions and amps up the fierce battle for New Yorkers’ online food budgets. Jet’s up against Amazon.com Inc.’s Prime Now service, Ahold Delhaize’s Peapod and closely-held market leader Fresh Direct, which are all investing to capture more customers. It’s also the latest move by Blue Apron to expand beyond its subscription business, which is reeling from customer defections as more companies -- including Jet’s parent Walmart -- enter the meal-kit space.

“This is a big, big important step for us,” Blue Apron Chief Executive Officer Brad Dickerson said, adding that the “vast majority” of customers would rather order meal kits on short notice, eschewing the traditional Blue Apron subscription model that requires users to plan meals well in advance.

Walmart's Jet Helps Blue Apron's Biggest Problem: Planning Ahead

Jet, acquired by Walmart for $3.3 billion in 2016, is making a play for busy, affluent city dwellers who already shop on Jet for general merchandise and household goods. The company will open a new fulfillment center in the Bronx later this year, and grocery deliveries will be handled by Parcel, a New York-based logistics company Walmart bought last year. Jet doesn’t disclose what share of its sales come from food, but “it’s smaller than we want it to be,” president Simon Belsham has said.

For Blue Apron, Jet offers a source of new revenue at a crucial time. The number of people ordering its signature boxes of food to make home-cooked meals dropped 24 percent in the second quarter compared with the same period last year, leading CEO Dickerson to look for new channels to sell his wares, such as Costco Wholesale Corp. and online delivery services like Seamless and GrubHub Inc. Blue Apron has projected declining sales over the back half of 2018, and its shares have fallen more than 70 percent this year to close to $1.

The Blue Apron meal kits on Jet will each serve two people and can be prepared in about 30 minutes, the companies said. They’ll sell for between $16.99 for the Italian farro bowl and $22.99 for the seared steaks meal.

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