Blue Apron, one of the biggest players in the rapidly growing boxed-meal industry, today announced that it landed $135 million in Series D funding from Fidelity Management and Research Company, valuing the company at $2 billion. This influx of cash offers new insight into how the company plans to grow and strengthen its supply chain operations.
Blue Apron, which launched three years ago, has tripled its volume over the last six months and currently delivers 3 million meals every month to home cooks throughout the country, the company said in a statement. Each meal costs roughly $10.
Matt Salzberg, Blue Apron’s cofounder and CEO, tells Fast Company that the company intends to use this funding to bolster its supply chain and fulfillment logistics, which he says are the most crucial parts of the business. “If you think about what we do, it’s really quite challenging,” he says. “Every single week, the menu changes 100%, and in a high-growth environment it’s quite difficult to keep up with the fulfillment side of things.”
Blue Apron, he said, will use the new funding round to invest heavily in its relationships with farmers in order to coordinate on crop rotation and harvests. Salzberg says that this is mutually beneficial: It helps Blue Apron have a reliable supply of produce, and helps farmers to more accurately predict demand, thereby reducing waste. “One of the hardest parts of being a farmer is having the reliability of demand for your product,” Salzberg says. “Since we have subscription-based relationships, we can forecast our demand quite well and be good counter-parties to these farmers.”
According to Salzberg, Blue Apron will purchase millions of pounds of produce from family-run farms this summer that were planted specifically for the company. “By planning farther ahead, we can drive costs down for both us and the farmers—and ultimately our customers,” he explains. “Going deeper and deeper into our supply chain allows us to reduce waste at every stage.”
Blue Apron will also be investing in technology that will allow the company to streamline the production process. Salzberg says Blue Apron has a data science and analytics team that manages forecasting, inventory, shipping and packaging, and closely studies customer behavior. This team helps to create menus based on farmers’ current food production. “It allows us to be hyper seasonal when planning meals,” he says. “We can also source locally to our fulfillment centers so that customers receive produce that is local to their region.”
The company currently has fulfillment centers in California, New Jersey, and Texas, but given that it delivers to 99% of the U.S., meal boxes still need to be transported across great distances to arrive at people’s homes. This means packing boxes with plenty of ice packs and other insulation materials to make sure food remains fresh. Some Blue Apron customers have complained about excessive packaging. Salzberg says that Blue Apron has a design team working to make the packaging more sustainable, but has no immediate plans to dramatically change the way the boxes are packaged.
With this new round of investment, Blue Apron will be the best-funded boxed-meal company in the industry, just ahead of HelloFresh, which recently closed $126 million in Series E funding from Rocket Internet.