Marketing spend rose tenfold in two years. The customers it bought were worth less than the ones who came first.
Blue Apron filed to go public in June 2017. Its registration statement is one of the few public documents where a consumer subscription company showed investors how much each year’s new customers spent. Read with the marketing line beside it, it’s a warning about what happens to an offer at scale.
The marketing line is plain. Blue Apron spent $14.0 million on marketing in 2014, $51.4 million in 2015 and $144.1 million in 2016.
The filing also showed average net revenue per customer in each annual cohort’s first six months. As reported from the filing: $402 for customers acquired in 2014, $451 for 2015 and $387 for 2016.
Put the two charts together. Between 2015 and 2016 the company nearly tripled its marketing, and the average customer it acquired spent 14% less in their first six months (derived: $387 against $451). Growth came from buying more customers, and each one was worth less than the last year’s.
At scale, the same offer reaches people who were less sure they wanted it.
The IPO priced in June 2017 at $10 a share, below the $15 to $17 range first set, valuing the company at just under $1.9 billion. In 2023 Wonder Group agreed to buy it for $13 a share, about $103 million in equity value (both reported by CNBC and TechCrunch). There were many reasons, from competition to operations. The cohort line was visible in the filing, and it pointed the same way.
Outside analysts tried to back out what the filing didn’t say. Daniel McCarthy, a marketing professor who models customer bases from public disclosures, estimated from the cohort data that roughly seven in ten new customers were gone within six months, and put acquisition cost in early 2017 at around $147 per customer. Those are estimates from a model, not disclosures; the direction is what matters here.
The filing doesn’t break out what Blue Apron spent on first-box discounts, so this isn’t a claim about any one promotion. It’s a claim about what happens to any first offer as spend rises. The first customers a brand acquires are its most certain: people who wanted exactly this. Every extra dollar of spend reaches someone a little less sure. Lewis’s uncertain customer, from the last chapter, is who you meet at the margin.
If the first offer leans on price, scaling spend recruits more of the people price is persuading, and fewer of the people the product is persuading. The six-month revenue line bends down while the customer count line bends up, and the growth chart looks fine until the cohorts are drawn.
This is one chapter of The First Offer, which is free and readable in full on a single page with no form in front of it.