Blue Apron, an ingredient and meal kit servicing company that operates exclusively in the United States has decided to downsize 6% of its workforce, only four months since the company went public.
Currently, the company has close to 5,400 employees, which means more than 300 employees would be laid off. The job cuts will have an impact on Blue Apron’s corporate offices, as well as its warehouses. In August, the company imposed a temporary freeze on hiring, and ended up firing 14 members of its recruitment team.
In a letter to employees, CEO Matt Salzberg wrote: “The actions that we took today flowed from the roadmapping and reprioritization exercise that we recently undertook. As part of that work, we identified the need to reduce some roles, open others, and streamline decision making for greater accountability. Wherever possible, we sought to fill new roles with existing employees. It was particularly important to us that we show this respect and appreciation with meaningful severance packages and ongoing job placement support, which we are in the process of providing.”
These layoffs will cost nearly $3.5 million in terms of severance payments. The last few months have been very tough for this company. In June 2017, Blue Apron went public with an initial public offering. However, the company raised less than it required from the IPO. This limited the company’s resources to go against its competitors. The company also cut its marketing efforts, which cost more customers in the 2nd quarter. The orders from its new fulfillment center were delayed.
Blue Apron’s market leadership is under serious threat, as their shares have declined by 47%, to $5.30, since the IPO. Experts think the poor performance of its IPO was due to an announcement made by Amazon in June about their intention to venture into meal delivery service. They planned to achieve this by buying Whole Foods for $13.7 billion. This venture by Amazon could make them a powerful competitor for Blue Apron.