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How Blue Apron is Changing Marketing Spend to Drive Profits

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To put it simply, Blue Apron  (APRN)  is focusing its marketing dollars in a more strategic way now, rather than just explaining on a mass level why the service is better than competitors' offerings. 

After having lost most of its market value since its IPO in 2017 in the face of growing competition and a slowing meal-kit market, Blue Apron has found itself in a much better situation in 2020 with this tailwind. The shares are up 30% for the year, while the S&P 500 has fallen more than 10%. Monday, the stock rose 16% after earnings.

The company, while reporting a revenue decline in the first quarter, said it expects to grow revenue in the second quarter in the high single digits in percentage terms. After having posted net losses for the past several years, management is looking for an adjusted EBITDA margin of almost 4% for the quarter. And for the year, the company expects to post consecutive quarters of adjusted profits before non-cash expenses and interest and tax.

Part of the strong revenue picture is a growing base of new customers, an important asset the company wants to fully optimize, post virus.

Now, the company wants to keep those new customers and marketing, which has historically eaten into profits hugely, will be key. 

 Here's what CEO Linda Kozlowski said to TheSteet:

"A big part of it for us is thinking about how we take those marketing dollars and apply them as they are needed most at this particular time. So for a while, when we didn't need to do as much acquisition in the beginning of some of the uptick in demand, we were directing those more towards retention and other types of activities. And now we're starting to get back into marketing in a very different way because the market is different now and we can be a lot more efficient with our spend than we were before, but at the same time making sure that we're really addressing the needs of customers in marketing and not just going for the hard sell."

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