Blue Apron and the rise of the non-demand economy
Earlier this week, I wrote a long story about how all the attempts for better living through mobile phone apps which bring the world to you are starting to fall apart.
I took aim at a few categories-- including home cleaning, home blow-out and manicures, and food delivery.
My argument was these services will never be the “Uber of” anything because they-- at best-- solve a problem not that much better than it was already solved, and in many cases only solve it once, not -- say-- everytime you need a car like Uber. (Go here to read the entire thing.)
It was one of our highest read stories of the week, and provoked a lot of discussion IRL, by email, and on social media. But one comment has stuck with me for days. It’s so right, and I was so wrong that I’m surprised only one person pointed this out. On Twitter, Jordon Kovnot asked how I possibly described Blue Apron-- the only unicorn in the crowded food delivery space -- as part of the On Demand economy.
Um…. because they are delivering pre-measured ingredients to your door at the push of a button, I answered. Duh. Sounds pretty on-demand to me. And not just me. I frequently see it included in these types of roundups, given it is in roughly the same space as companies like GrubHub and Postmates.
But Jordan pointed out something obvious that I’d know if I used these services: They are not on demand at all. They are the very opposite of On Demand. You have to be a subscriber to use both BlueApron and Plated, and set the times you want deliveries well in advance of dinner. If you get home and need a quick dinner solution, there is absolutely nothing they can do to help you. They may compete with GrubHub or Postmates in the sense of who brings food to your house, but really, they do something totally orthogonal. Like Snapchat and Whisper connect you with people and enable self expression, but also run utterly contrary to Facebook’s insistence on identity and permanence.
These companies are leaders in the non-demand economy, not the on-demand economy.
This insight makes me even more confused that BlueApron appears to be doing so well. As I mentioned, I don’t know anyone who uses it, and you’d think a time-pressed mom/CEO like me and many of my peers would be the exact demo. My informal Twitter poll confirmed that the service is used most heavily in its home market of New York, and in nearby Boston. So this could be a Valley thing.
But after I spoke with Jordan I know why I don’t use it: I can only sign up when I don’t have the specific problem. It’s the opposite of going to the grocery store hungry-- which is bad for you but good for the grocery store. I only pay such a fortune to Postmates because when I am starving I don’t care about “Blitz Pricing.” I look at BlueApron-- not hungry and not with an immediate problem to solve-- and think, “Really? $60 a week? That seems pricey.” Nevermind, I’ll pay nearly any price to get a Defina’s pizza delivered via Postmates when I am starving, working late, and can’t leave the house because the kids are asleep.
How do I know what I’m going to want to cook next Tuesday? How do I know I’ll even be home in time to cook? Or if I’ll even feel like cooking?
And these services require you to sign up for an entire plan, not just a one-off meal. The plans aren’t particularly flexible. My issue with regularly cooking dinner isn’t the actual cooking of dinner or measuring ingredients. It’s the fact that I am horrible at planning ahead. If I could plan ahead better, I’d just run to the grocery store or order from Instacart.
The more I thought about this, it occurred to me that the “Uber for kids” apps are also part of the non-demand economy. Shuddle and HopSkipDrive both make you order a ride the night before. Is this a new trend? A carving off of things we need done for us that don’t quite need immediate attention?
Fascinated by how this could possibly make the service more appealing, I dug through my timeline to find Jordan again. He explained that it was great for them because they had a baby. Which is interesting because I have two young kids and that’s the exact reason I feel I couldn’t predict whether I had the stamina to cook!
@sarahcuda (pre-kids) when I had more flexibility I don't think this service would have worked well for me— Jordan Kovnot (@kovnot) July 30, 2015
I wonder how long these services will stick to the strict subscription model-- particularly a restrictive one that requires you plan to cook nearly half of your week to get the value from it. Many of the “stuff in a box!” commerce companies have gone belly up, while those who have thrived like Honest or BirchBox have broadened out how you can buy them via third party retail, in the case of Honest, or bespoke stores and full single-purchase ecommerce sites.
Nick Taranto of Plated reached out to me after my article and I asked him about this. He responded, via email:
I would put this line of logic under the umbrella of the "unbundling of the grocery store."
If you follow the Clay Christensen line of logic around "top-ups" vs "fill-ins" then what we are doing is NOT on demand -- let the Instacarts, Postmates, etc compete for the "fill-in"/on demand consumer use case. We are instead playing for the larger basket and much more consistent use case of weekly "top up" or planned behavior. We are not building a business to try to be everything to everyone. We are building a business for folks who are interested in curated food discovery and who can commit to 2-3 nights of cooking per week.
Ok, I get that. Stay in your lane and all. But is that a big enough demo to support one $2 billion company in Blue Apron and at least another very well-funded one in Plated? Taranto answered that dinner for families making more than $100,000 a year is a $132 billion industry.
Granted, but pet food is also a big market, as are groceries, and plenty of startups have failed while trying bringing those to your house. Home cleaning is a big market. That didn’t make HomeJoy succeed. Salon services are huge and so underserved that StyleSeat has built an impressive business organizing and facilitating appointments. But that doesn’t mean you regularly need enough blow outs at home to support a StyleBee.
It’s rarely size of the end market that’s the problem in today’s online world-- any market is big enough in absolute numbers to support lots of venture cash if you look at it that way. It’s whether enough people want to do things the way you are offering, and want to repeat that behavior enough to build a predictable, scalable, profitable company before your cash runs out.
I’m not arguing that the price point is bad for the value, or that people won’t pay for dinner. I just don’t see millions of people being organized enough to know which nights they want to cook, but time-pressed enough they can’t go to a store. Not to mention ones who want to do that as more than a few months' novelty. In the case of Jordan, it’s good for his phase of life now with a new baby. But possibly not forever.
Another knit: When I cook at home, I want to be healthy. Blue Apron and Plated meals are between 500 and 800 calories without dessert! A low-cal version would go a long way towards justifying the hassle of pre-planning and committing, at least for me.
What am I missing here? Something, obviously.
I guess now that I’ve spent three days grilling people on social media about why enough people could use Blue Apron religiously enough to make it worth $2 billion, even though I never hear a soul talk about it, I’ve nothing left but to try both services and see if the non-demand economy is any better at solving a problem than the on-demand economy.
I’m not optimistic, but at least I’ll reduce my Postmates bill for the next month or so.