Amazon.com (NASDAQ: AMZN) rained on Blue Apron's (NYSE: APRN) IPO last month, and now it's a deluge on its business model. TheStreet.com is reporting that Amazon filed a trademark application earlier this month for a rival meal-kit business.
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Amazon's July 6 trademark application calls for the delivery of "prepared food kits ... ready for cooking and assembly as a meal." The tag line -- "We do the prep. You be the chef." -- leaves little question about the market that the e-tail juggernaut is gunning for here.
Too many chefs in the kitchen
Amazon weighed on last month's Blue Apron IPO. Underwriters were hoping to price the new offering between $15 and $17 until Amazon made a $13.7 billion deal to gobble up Whole Foods Market (NASDAQ: WFM). Fears of Amazon combining its fulfillment prowess with Whole Foods Market's regional distribution and reputation for high-quality foods sent shockwaves through potential Blue Apron investors. Blue Apron had to settle for $10, and that may still have been too high. The stock has gone on to plunge 26% in its first 11 trading days, and the trademark news is sending the shares even lower on Monday.
Amazon is a model buster. It has disrupted dozens of industries. Amazon has had its humbling stumbles -- like Fire Phone, Amazon Auctions, and $399 Kindle -- but those are rare. If Amazon wants to make a dent in the do-it-yourself gourmet niche, it will price its way into the pole position.
Blue Apron isn't the only company in this market, but it was establishing itself as the top brand. The novelty of step-by-step recipes and packaged ingredients have made it a cult fave with well-to-do foodies. Revenue soared 133% to $759.4 million for Blue Apron last year. However, its slowing growth with revenue up a more modest 42% in this year's freshman quarter and its lack of profitability make it vulnerable if Amazon should dive in sooner rather than later with an aggressively priced knockoff. With or without Whole Foods Market, Amazon's already making a name for itself by delivering grocery items -- often within an hour of being ordered -- in select markets.
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Underwriters had to slash Blue Apron's IPO price on fears of Amazon doing exactly what it appears to be doing. The trademark application was made precisely a week after Blue Apron's market debut. Amazon's moves here are certainly something all of the upstarts in this market will continue watching closely.
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