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Next Stop For Amazon? Meal Kit Segment

Next Stop For Amazon? Meal Kit Segment

As if Amazon didn’t already have its hand in enough retail and technology offerings, the e-Commerce giant is adding home-delivery meal kits to its growing grocery service. The company filed a trademark application on July 6 for “prepared food kits” and for the slogan “We do the prep. You be the chef.”

Amazon already is selling home-delivery meals to select U.S. Prime members through the AmazonFresh grocery delivery service. For users able to participate in the trial, there are approximately 17 different meals offered, ranging in price from $14.99 to $18.99. Previously, Amazon has offered meal kits through partnerships with Tyson Foods and Martha Stewart, but only recently introduced its own branded trials in June, according to customer reviews on the site.

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The meal kit delivery space generates $5 billion in sales, giving Amazon plenty of competition upon market entry. But with Prime already serving 85 million members, the company is set to deliver to a wide following of shoppers that Blue Apron and other meal kit delivery services don’t already have in place.

Amazon may look to target Millennials, considered the low hanging fruit for meal kit purchasing: 25% of those aged 26-35 already have a grocery subscription, branded recipes or meal-delivery, according to Walker Sands. As many as 39% of those aged 26-35 report they’re “extremely likely” to make an online grocery purchase in the next year, while another 30% saying they’re “somewhat likely.”

Online grocery sales may grab as much as 20% of the total grocery share by 2025, so Amazon’s massive distribution footprint can help bring AmazonFresh services to a continually expanding audience; giving it an advantage over other meal kit providers.

Blue Apron And Other Meal Kit Competitors Feel Pain Of Amazon’s Entry

Blue Apron went public in the wake of Amazon’s $13.7 billion Whole Foods acquisition, and the poor timing forced the meal kit provider to trim its IPO range from $15 to $17 per share all the way down to $10 to $11. After debuting at $10 per share on June 29, stock prices have plummeted 36.4% to $6.36 per share as of the market close on July 18.

Meal kit delivery services including HelloFresh, Home Chef and Plated are now feeling the heat that many retailers have felt over the past few years as Amazon continues to disrupt different segments of the industry.

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