We all know how things can change in business and it was just back in February we discussed how food product delivery would change. Driving through South Jersey on Monday I could look at the empty malls and see physically how the Internet has changed shopping. Today we will focus on two players in this new market, one going up and going down in business.

Spring Update

The ups:

Blue Apron goes for another IPO.  In looking at the site Investopedia they value the Blue Apron's IPO at $100,000,000 but the owners would retain ownership. Private markets valued them at over $2 Billion recently but like any new business they are fraught with risk. Both Amazon and Walmart have recently got into the Grocery delivery business. We all know what Amazon has done at the retail level, they recently teamed up with Martha Stewart to deliver ready to cook meals. Walmart. the largest brick and mortar retailer in the US, has been using Uber to deliver groceries and now has introduced the concept of having their employees deliver the groceries on their way home.

Why all the clamor? According to Investopedia:

If Blue Apron can figure out a profitable model for its operations, then it will have hit gold. In a June report last year, research firm Morgan Stanley estimated that the market for restaurant spend was worth $210 billion. However, online delivery (which includes delivery from established restaurants) was responsible for only $10 billion of that spend. Healthy meal delivery services, of which Blue Apron is a part, were responsible for $1.5 billion of revenue last year. If Companies like Amazon and Walmart can break though this next frontier of food delivery it will be worth some real dough (pun intended).

A recent survey of British households in late May by Business Insider shows the grocery industry going through a change similar to the traditional retailers. The chart below shows what consumer preferences are and the will have a marked effect on traditional grocery retailers.


What about the downs:
We also discussed the recent problems with Whole Foods and their store closings.  Just last week one of their major investors Jana Partners pushed for board members from ex-Kellogg employees as well as Harris Teeter. Whole Foods has been looking at smaller stores as well as coupons and other ways to get people in their stores.


In doing my research on this subject I have concluded that these Companies aren’t really digital firms but are Companies that use digital to transform the current business model into a different model. Amazon has proven what digital can do to retail. But note now Amazon is opening up pop up stores all over. Companies that use digital to attract buyers with coupons or social media will do best to use a combination of tools to reach their goals. We have talked about transformation in markets and now these transformations will disrupt the method we get and deliver our food products.  Just like the pork producers in NY that are supplying Blue Apron, finding new channels to distribute your products in this digital age can only help not hurt. 


Issue 628 - Fatal Flaw Modernized

Olin Thompson's concept of the Fatal Flaw in Software was featured in our newsletter about thirteen years ago. Today we will modernize that article with more current information.

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