Blue Apron Holdings, Inc. (APRN) Q4 2020 Earnings Call Transcript

Blue Apron Holdings, Inc. (NYSE: APRN) Q4 2020 earnings call dated Feb. 18, 2021

Corporate Participants:

Linda Findley Kozlowski — President, Chief Executive Officer

Randy Greben — Chief Financial Officer

Analysts:

Maria Ripps — Canaccord — Analyst

Matt Membase — Morgan Stanley — Analyst

Aria Cole — Cole Capital — Analyst

Presentation:

Operator

Good morning. Welcome to Blue Apron Holdings Fourth Quarter 2020 Earnings Conference Call and Webcast. [Operator Instructions] As a reminder, this call is being recorded, Thursday, February 18, 2021, for replay purposes. A slide presentation has been created to accompany today’s remarks, and can be accessed at the Blue Apron Investor Relations website.

[Operator Instructions] On this morning’s call, we have Linda Findley Kozlowski, Chief Executive Officer of Blue Apron; and Randy Greben, Chief Financial Officer.

Before handing the call over to the company, we will view the safe harbor statement. Various statements that the company makes during today’s call about its future expectations, plans and prospects, constitute forward-looking statements for the purpose of the safe harbor provisions under the Private Securities Litigation Group for Act of 1995. Actual results may differ materially from those indicated by those forward-looking statements as a result of risks and other factors, including those described in the company’s earnings release issued this morning and the company’s SEC filings. In addition, any forward-looking statements represent the company’s view only as of today, should not be relied upon as representing its views as any subsequent date. The company especially disclaims any obligation to update these statements.

During this call, the company will be referring to non-GAAP measures, which are not prepared in accordance with Generally Accepted Accounting Principles. We are encouraged to refer to the earnings release and SEC filings where we have defined these measures, and to review the reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures. In addition, reconciliations of certain forward-looking non-GAAP measures referred to during this call are included in our earnings release, which is available on the company’s investor relations website located on investors.blueapron.com.

With that, I would like to turn the call over to Linda Findley Kozlowski, Blue Apron’s CEO. Linda?

Linda Findley Kozlowski — President, Chief Executive Officer

Thank you, Kate. Good morning, everyone, and thank you for joining us today. Since it’s my first chance to speak with most of you this year, I’ll start by wishing everyone a happy New Year and express my hope that you’re all staying safe and healthy.

We’re coming up on nearly a year of dealing with the tremendous challenges of the global pandemic that upended so much of our daily routines and experiences we likely took for granted.

I am hopeful that progress towards a safer and healthier new normal will continue, so that friends, families, colleagues and investors can come together again and interact with each other in person around the dining table and at conferences and other meetings later this year.

Before diving into our fourth quarter results, I’d like to introduce Randy Greben, who joined us as Chief Financial Officer in early January. Randy brings more than 20 years of finance, eCommerce, direct-to-consumer and food industry experience, as well as a track record of implementing strategies to drive scale. Randy’s skill set is aligned with our near and long-term objectives, and we couldn’t be more excited to have him on board. You’ll hear from him in just a few minutes, and I’m sure many of you will have a chance to speak with him at length soon.

I’ll also take this opportunity to highlight that Charlean Gmunder joined us as our Chief Operating Officer in late November. Her background and experience of more than 30 years in food operations, including food manufacturing and fulfillment, are an excellent complement to Blue Apron’s leadership and operations teams. She has a broad set of responsibilities, including oversight of our fulfillment, supply chain, logistics, food safety and quality assurance, physical operations and customer experience teams. As with Randy, Charlean’s knowledge and expertise aligns with our strategic goals, and she’s focused on further improvements across our operations.

We are thrilled to have such talented senior executives join the Blue Apron leadership team. Both Randy and Charlean have hit the ground running and are already making a positive impact on our business.

Shifting now to what was a very active fourth quarter and full year. We saw a number of significant improvements across many of our key customer metrics over the last nine months of 2020. Throughout all of 2020, we executed against our growth strategy, quality standards and the implementation of return-focused marketing programs. Together, these three initiatives represent the foundation of our strategies to better attract, engage and retain customers.

The pandemics continued impact on consumer behavior also contributed to fourth quarter and full year improvement. We believe the progress achieved in 2020 lays the foundation for the continued execution of our growth strategy, and our team is working every day with a commitment to continue to become better in our focus, discipline and execution.

We continue to see strong demand for our meal kits with year-over-year revenue growth of 22% and quarterly sequential revenue growth in the fourth quarter. In addition, the fourth quarter represented the third consecutive quarter of quarterly sequential increases in year-over-year revenue growth. And it’s notable that the acceleration in the second half of the year took place during what are historically our two seasonally slowest quarters, although seasonality was masked to some degree in 2020.

The top line year-over-year growth, combined with our continued focus on cost optimization, led to adjusted EBITDA loss and net loss coming in significantly better than our guidance targets.

As previously discussed, we also strengthened our balance sheet in 2020 through a public offering of Class A common stock and a new senior secured term loan. The added financial flexibility afforded by these transactions provides us the flexibility to pursue additional opportunities to execute our growth initiatives.

Turning now to some highlights from the fourth quarter. Customers rose year-over-year, but declined sequentially from the third quarter as we managed our marketing spend to partially offset the labor constraints that impacted capacity in the quarter. However, the progress we’ve made against our growth plan can see in the year-over-year improvements across certain key customer metrics. These metrics include orders per customer, which were up 15% year-over-year; record average order value and average revenue per customer, which was above $300 for the first — the third quarter in a row, the only quarter since 2015 we’ve achieved these levels.

Looking ahead from our fourth quarter and full year growth. Our expectation is for strong year-over-year growth in the current quarter, which is expected to increase again on a quarterly sequential basis. This expected improvement reflects the success of our growth strategy to date against the backdrop of increased demand due in part to ongoing changes in consumer behavior.

As a result of the pandemic, we saw that cooking habits increased in 2020, and both third-party and our internal research found that those habits are expected to continue into 2021. As a critical part of our growth strategy, we plan to lean into this trend to continue to provide product variety, flexibility and choice.

A recent third-party report shows that 75% of consumers surveyed indicated they are interested in improving their cooking skills, whether to get more enjoyment out of the process or to make their time in the kitchen more efficient. We believe meal kits are well positioned to meet these interests. And Blue Apron removes the burden of recipe planning, offers cuisine and high-quality ingredient variety and introduces consumers to new cooking techniques that help them sharpen their skills in the kitchen.

We believe our culinary authority, combined with our product innovation are key points of differentiation for Blue Apron. And in 2020, we introduced more products than in any prior year. While this was a success for us last year, I do want to highlight that as we enter 2020, our road map called for the introduction of even more new products before we shifted our focus to better serve our customers during the pandemic. We believe that the new products that were held back may be some of our most exciting introductions to date, including expansion into different meal applications.

I’m happy to report that the initiatives we put into place in the fourth quarter to enhance fulfillment center efficiencies have helped open up sufficient capacity to a point where we have increased our menu variety and rolled out new product enhancements, including introducing recipe customizations and our meal prep plan nationally.

Our decision to temporarily reopen the Arlington facility this quarter has also given us more capacity flexibility. We believe this positions Blue Apron to continue to introduce new products into 2021, including product enhancements that we held back last year.

Staying focused on our 2020 product launches, I’d like to highlight the initial successes around some of our new products. In Q4, we launched Blue Apron Customized nationally, which offers our customers a bridge between our core menu and our premium offering, giving them the option to upgrade or swap certain aspects of their meal. This new feature allows the flexibility to satisfy spectrum of dietary needs and preferences while minimizing the need for compromise at the dinner table. This offering has been well received by our customers, and we are continuing to add more customization options this quarter.

Another new offering launched nationally in the fourth quarter is our option to purchase multiple orders per cycle, which allows our meal kit customers to receive a second box for any given weekly cycle. Importantly, this offering provides added flexibility, giving the customer the option to send orders to different addresses, deliver the orders on different dates within the week, double up on recipes or purchase special occasion or meal plan boxes in addition to a signature box. The multiple orders per cycle offering is also available to our wine customers, which allows for an additional line box per monthly cycle.

These two offerings have built on the continuing success we’ve had with our premium offering. Taken together, our product innovations contributed the record average order value we generated in the fourth quarter.

We also recently announced our Wellness 360 program, which builds on the wellness initiatives we already had in place. Our Wellness 360 campaign showcases how home cooking can benefit holistic wellness, which includes physical, brain, relationship, mental and financial health. It’s our approach to helping customers better understand the benefits of cooking with Blue Apron and how that can have access on their wellness journey — how that impacts on their wellness journey going beyond the food that ends up on their plate.

The Wellness 360 campaign includes recipes designed by our in-house nutritionists and feature fresh produce, whole grains, high-quality proteins and natural sweeteners. This program complements and expands our other offerings to provide more variety and flexibility.

For example, we started to offer our home cooks recipes designed for quicker prep and easier cleanup, like sheet pan and one-pot dinners, so that they can focus on the things that keep them away from the kitchen but still enjoy a delicious meal without sacrificing on flavor. We also find that our customers continue to look to us to help them celebrate moments, big or small, with restaurant quality meals.

In 2020, we introduced our first ever Thanksgiving box in partnership with Chef Eduardo Jordan, which generated stronger-than-anticipated demand. And this year, we teamed up with Stella Artois to create Stella Stadium Bites, which offer chef curated, fan favorite menu items to enjoy during the big football game.

In addition to the new occasion-based offerings we plan to introduce this year, we have an exciting product roadmap that will build on the innovations introduced last year. The new products planned for this year are important initiative in further differentiating Blue Apron from peer offerings, which we believe will help drive additional engagement, order value and retention.

Turning now to operations. We continue to make progress with our operating efficiencies first introduced in the fourth quarter. These efficiencies leverage the facilities and infrastructure we already have in place that are capable of addressing higher demand as we continue to work to overcome labor availability challenges we’ve experienced.

These new initiatives have helped increase line speed, overall labor utilization and equipment optimization and effectively decreased the labor required per pack line and labor minutes per box.

With improved operational efficiency and the temporary reopening of our Arlington facility this quarter, we believe that we are positioned to address forecasted demand.

We plan to drive additional demand by stepping up our marketing and to continue that higher investment throughout the year while still positioning the company to drive higher variable margin as we expect to continue to benefit from our new operating efficiencies. Our work to become more efficient in our marketing spend continues, and we’ve been seeing faster payback periods.

With regard to our supply chain availability and safety, we have not experienced any significant disruption as a result of the pandemic. In fact, we’ve been able to continue to leverage our robust supply chain and strong supplier network to expand the diversity of ingredients available to create our weekly menus and to support our new customization and premium options.

As highlighted by the first quarter guidance we provided this morning, we’re expecting a strong start to the year as we continue to execute on our growth strategy and as our operating momentum continues in 2021.

We’ve taken the time over the last several years to improve our operations, including from how we connect and engage with our customers to how we’ve enhanced our menu variety and fulfillment center practices and so much more.

As a result, I believe that the growth that we achieved in 2020 is just the launching point for Blue Apron. We expect that the ongoing changes in consumer behavior as a result to pandemic will continue to some extent, even after the direct impact of the pandemic ends and that we have the right operating strategies in place to drive and meet consistent increased demand.

I believe that we are more competitively positioned to attract, retain and engage more customers than at any time since I joined Blue Apron almost two years ago. I also believe that we will be able to continue to demonstrate how much we’ve improved across the business and how much more we will be able to achieve going forward.

As always, we appreciate our long-standing customers as well as those who have recently turned to Blue Apron. We take seriously our commitment to provide every customer that invites us into their homes with a quality meal experience and world class service. Every day, we seek to prove so that we can retain our customers and attract new ones.

Finally, I want to acknowledge the ongoing impact of pandemic has had on the daily life and health of our employees, customers and the communities where we operate. I’d also like to send my thoughts to those who are impacted by the recent winter storms across the country. Our employee safety remains our top priority and our service to Blue Apron and our customers has been exemplary.

I will now turn it over to Randy to talk about our financials in more detail.

Randy Greben — Chief Financial Officer

Thank you, and good morning, everyone. It’s great to be speaking with you for the first time since joining Blue Apron in January. As highlighted in this morning’s release, our fourth quarter results were ahead of the guidance we provided. When you look at the year-over-year comparison, it is clear our return to growth strategy is continuing to move the ball forward.

Net revenue in the fourth quarter of 2020 rose more than 22% year-over-year to $115.5 million, which was ahead of the upper end of our guidance range of $112 million and represented our third consecutive quarter of double-digit year-over-year net revenue growth.

As stated in our third quarter earnings call, our fourth quarter guidance had assumed that we would recover up to $2 million related to credit issued in connection with the voluntary supplier recall of onions from the third quarter. Had we recovered that in the fourth quarter, it would have had up to $2 million of additional positive impact on both the top and bottom line.

Fourth quarter meal kit demand was driven by our more expansive menu offerings, the continuation of our celebrity Chef partnerships, including a successful program with Chef Eduardo Jordan and the continued rollout of new products such as our customization initiative.

As Linda noted, product innovation is a key priority for Blue Apron. And even as we rolled out more new product innovations in 2020 than ever before, we expect to launch additional new products in 2021, which will be supported with significantly higher marketing spend. We believe these efforts will drive future demand.

When Blue Apron reported third quarter results, management highlighted some anticipated impacts to the fourth quarter demand as a result of ongoing labor availability challenges. As a result, we did not lean us heavily into marketing as we otherwise would have. That said, we modestly stepped up our marketing investment with fourth quarter spend of $12.5 million or 10.8% of net revenue compared to $10.9 million or 9.7% of net revenue in the third quarter of 2020.

We believe we are well positioned with the right equipment, facilities, supply chain and food safety protocols in place to support higher demand. And in the fourth quarter, we continued to execute operational efficiency products and other initiatives, such as supplier prepackaging of certain ingredients, which ultimately led to reducing labor hours and improved capacity.

In addition, we temporarily reopened our Arlington, Texas facility this quarter to enable us to leverage existing assets while we continue to identify and implement other operating efficiencies. We expect our progress with efficiency and capacity initiatives will allow us to meet forecasted demand in the first quarter and full year even if some of the pandemic driven challenges persist.

We believe we are positioned to execute on the critical parts of our growth initiatives, focused squarely on driving demand, including the increased investment in product innovation and increased investment in marketing, as I noted earlier.

Turning now to a review of our key customer metrics, which continue to reflect the benefit from our focus on customer engagement and retention. We had 353,000 customers in the fourth quarter of 2020, up from $351,000 in last year’s fourth quarter and down slightly from the third quarter, largely reflecting our decision to manage demand given the capacity constraints we’ve discussed.

Orders per customer of 5.3% remained at improved levels and were up more than 15% year-over-year. Orders per customer continued to track around our highest levels over the last five years. Average order value was a record $61 compared to $58 in the fourth quarter of 2019. Average revenue per customer was more than $300 for the third consecutive quarter, rising 22% year-over-year for the second consecutive quarter to $327 and marking our second highest quarter ever.

Reflecting our operating momentum, the last three quarters have been the only time Blue Apron has recorded average revenue per customer of more than $300 since prior to 2015. On the cost side, cost of goods sold, excluding depreciation and amortization as a percentage of net revenue improved year-over-year by 40 basis points to 60.6%. Our variable margin was 39.4% in the fourth quarter of 2020 compared to 39% even in the fourth quarter of 2019. The improvement in COGS and variable margin as a percentage of net revenue largely reflects our continued focus on cost efficiency, which more than offset the frontline wage and bonus investments we’ve made in our fulfillment centers since the beginning of the pandemic.

Our focus on cost discipline is also evident in product, technology and G&A costs, with PG&A as a percentage of net revenue declining 550 basis points to 31.9%. On the bottom line, we reported a net loss of $11.9 million, which compares favorably to our guidance for a net loss of no more than $15 million. Adjusted EBITDA loss was $1.7 million, a favorable comparison to our guidance for adjusted EBITDA loss of $5 million and an 80% year-over-year improvement.

For the full year 2020, net loss and adjusted EBITDA improved 24% and 88% to losses of $46.2 million and $1 million, respectively, demonstrating our ability to manage costs throughout the organization and maintain efficiencies in our fulfillment center network.

We recorded negative operating cash flow and free cash flow of $1.3 million and $2.5 million, respectively. These metrics demonstrate significant improvements of roughly $10 million each compared to last year’s fourth quarter.

As detailed on our third quarter conference call, we strengthened our balance sheet and improved our financial flexibility in 2020. At December 31, 2020, we had cash and cash equivalents of $44.1 million and $34.1 million in total outstanding borrowings under the senior secured term loan, of which $30.6 million was classified as long-term debt and $3.5 million was classified as the current portion of long-term debt.

As such, we remain confident that we have positioned Blue Apron to better compete in the marketplace, and we continue to believe we have the necessary capital resources to drive the profitable growth.

Turning to our financial outlook for the first quarter. Let me first share some assumptions. Our guidance assumes both the consistent benefit to our business from the execution of our strategic growth initiatives and ongoing operational improvements as well as continued higher levels of demand as a result of changes in consumer behavior and our planned increases in marketing initiatives and spending. Further, our guidance assumes that we will not experience any unforeseen significant disruptions in our fulfillment center operations or supply chain as a result of the pandemic or otherwise.

In addition, because the timing of the onion recall recovery remains uncertain, we are not assuming recovery of the up $2 million of credits in our first quarter outlook.

Reflecting these factors and assumptions, we expect first quarter net revenue will increase year-over-year by approximately 23% to 27% to approximately $125 million to $129 million, which would be our fourth consecutive quarter of double-digit year-over-year revenue growth. This growth is expected to reflect year-over-year and quarterly sequential increase in customers, driven in part by the significant increase in marketing investment we have planned for the first quarter. We expect to incur a net loss of no more than $16 million in the first quarter and an adjusted EBITDA loss of no more than $6 million.

Looking forward to the full year 2021, we expect to achieve double-digit net revenue growth. For easy reference, a reconciliation table from net loss to adjusted EBITDA is included in our earnings release, which has been posted on Blue Apron’s Investor Relations website.

Linda and I will now take your questions.

Questions and Answers:

Operator

We will now begin the question-and-answer session. [Operator Instructions] Our first question is from Maria Ripps from Canaccord. Go ahead.

Maria Ripps — Canaccord — Analyst

Good morning. Randy, congrats on joining the company. Thanks for taking my questions. So first, as we look at your 2021 projected revenue growth, any color you can add around how to think about customer growth versus higher spend per customer? And I guess related to that, can you share your view on how your marketing spends may play out outside of Q1 and for the balance of the year? And then I have a quick follow-up.

Linda Findley Kozlowski — President, Chief Executive Officer

Sure. I’ll start that question and if Andy wants to add to it, he certainly can. We are not specifically disclosing some of those spend levers. However, what we have said is that we are going to continue to lean into marketing in Q1 based on our planned investments that we stated last year and this quarter as we added more liquidity to the company through the equity offering last year. So this is primarily to invest in customers. And so we plan to invest in long-term strategic growth where we can make sure that we can maintain our customer growth in a healthy manner on a long-term basis.

So I can’t give more guidance than that. But what I can say is we plan to continue to lean into investment as appropriate by quarter but maintaining significantly efficient paybacks as we have always done. And we stated previously that it would be within a year of payback, and we have seen acceleration in that payback and we intend to continue to see that same acceleration. Randy, anything you want to add?

Randy Greben — Chief Financial Officer

The only thing that I’d add is just to double down on the last point that you made, Linda, which is we remain extremely diligent about ensuring that our marketing paybacks are efficient and effective, and it’s something that we continue to monitor always. Beyond that, nothing else to add. Thank you.

Maria Ripps — Canaccord — Analyst

Thank you. That’s very helpful. And then can you maybe talk about your fulfillment capacity? And how long do you expect to utilize the Arlington facility? And maybe more broadly, what’s your sort of high-level view on where you are with fulfillment capacity? And do you see a need to expand your capacity ahead of expected demand? And then can you just maybe talk for a minute about some of the steps you have taken to increase labor availability?

Linda Findley Kozlowski — President, Chief Executive Officer

Sure. I’ll try to — and if I miss any of those, please remind me, Maria, as I’m going through. But we’ve taken several steps in order to increase capacity. And as we’ve discussed before, we wanted to make sure that we’re not just thinking about the immediate term, but thinking about long-term efficiencies that we can build into our operations in order to build ahead of capacity going forward or ahead of demand going forward. Plus, of course, the more efficient that we get, the better we can not only continue to scale but continue to invest in the growth of the business as we move the business forward.

So a few things that we’ve done specifically is establishing better packing process across our lines to save labor there. We’ve adjusted the distribution of labor in our facilities to make sure that we’re best utilizing our labor across our kitchen and our PAC operations. Better use of our equipment. As you know, we are a very automated facility, and we have a lot of fantastic automation equipment that helps us be a lot more efficient and now we’re better utilizing that equipment. And then also using some of our strategic supplier relationships to prepack certain ingredients where we have an advantage to having those prepacked with the same level of quality that we would hold ourselves to as far as our high standards, but be able to more efficiently use labor.

So those are just a few of the things that we’ve actually done. And we are seeing that result in a much more efficient use of our labor that while we still continue to hire additional labor, we also can scale capacity while we’re building in that complexity for our new product initiatives, all at the same time. So we’re very confident in all of those different areas around the fulfillment center.

We are looking ahead and making sure that we can always continue to scale above and beyond the demand that we have in place because we do want to be prepared for those new product initiatives and the investment in marketing, of course, as we continue to accelerate that throughout the year as well.

I can’t — I’m not sure if I missed any of your questions, but I apologize. But feel free if — because I know you had several there, Maria, did I miss anything?

Maria Ripps — Canaccord — Analyst

Yes, that’s very helpful. And just a quick one for how long do you expect the Arlington facility to stay open?

Linda Findley Kozlowski — President, Chief Executive Officer

Got it. So we’re basically looking at that on an ongoing basis to see what makes the most sense with a combination of both consumer demand and also, of course, making sure that we have redundancy and capabilities as we continue to ramp up some of these new product initiatives. So we don’t have an official date to say yet, but we continue to monitor that on an ongoing basis.

Maria Ripps — Canaccord — Analyst

Got it. That’s very helpful, Linda. Thank you so much for the color.

Linda Findley Kozlowski — President, Chief Executive Officer

Thanks so much, Maria.

Operator

[Operator Instructions] Our next question is from Matt Membase [Phonetic] from Morgan Stanley. Go ahead.

Matt Membase — Morgan Stanley — Analyst

Thanks for taking the question. I have two, if I may. You guided to double-digit percent revenue growth in ’21. Can you talk a little bit more about one or two of the key factors that gives you confidence in the sustainability of this growth trend as we emerge from COVID? And then second, can you provide context around the evolution of customer churn as you’ve increased optionality for the consumer? Thanks.

Linda Findley Kozlowski — President, Chief Executive Officer

Sure. So I will start on that and again, Randy, you can add any additional color. So first, let me start on the comments about sustaining growth. And again, we’ve said this time and time again that we have always been focused on building sustainable growth for the company, not just short-term growth. And a big part of that goes back to what we were talking about with the product initiatives that we’re putting into place. The product innovation and the acceleration, the fact that we were able to still introduce more products in 2020 than we had in any previous year even during pandemic time; also, adding to that the fact that there were several products that we did have on the road map that we had pushed to 2021 in addition to new product innovations that we’re going to do in 2021 is really the competitive advantage that we’re looking at going forward.

So specifically, we feel strongly that the customer road map and the innovation road map that we put into place has been designed to both increase the engagement and retention of our existing customers as well as our attractiveness and ability to recruit new customers on top of that more efficient marketing program that we have put in place.

So in addition to the external factors that say people are going to continue to cook at home in larger numbers beyond the pandemic, we’re really more focused on what are we doing structurally with our product and with our marketing programs to make sure that we can more efficiently attract and retain customers going forward.

And so we’re confident in that road map. We’ve already seen results from the initiatives that we’ve put in place so far, and we expect to continue to see results going forward.

On the customer churn question, we don’t currently discuss any of our customer churn numbers. What I will say is we have specific programs in place for 2021 to make sure that we are both growing and retaining our customer base. Randy, anything you want to add to that?

Randy Greben — Chief Financial Officer

The only thing that I would add on the last point is while we will not disclose our churn numbers, you can see real evidence in the quarterly results that we just announced around the effectiveness of some of the things that we’ve been doing as measured by things like increase in orders per customer and average orders per customer. Those are indicative of the company’s ability and focus on decreasing churn and driving more benefit to our existing customers.

Linda Findley Kozlowski — President, Chief Executive Officer

Yes. And just one added little point on top of Randy’s. And again, just to reiterate, we are seeing significant increase in those customer metrics, including our record AOV number that we saw in Q4.

Matt Membase — Morgan Stanley — Analyst

Great. Thank you very much.

Linda Findley Kozlowski — President, Chief Executive Officer

Thank you.

Operator

Our next question is from Aria Cole from Cole Capital [Phonetic]. Go ahead.

Aria Cole — Cole Capital — Analyst

Thank you very much. Linda, happy New Year to you as well and your fellow colleagues, and glad to see that all your hard work at improving operations internally at Blue Apron and are beginning to show good signs of continued improvement.

Question number one, just in terms of market size opportunities, clearly, you’re kind of in the meal kit and the meal prep portion of the market. If you look at the entire online meal delivery market as a whole, could you give us a sense for how large each of the segments are? So you’re kind of in meal prep, there’s also other portions that might call oven ready or ready to heat. And you may want to have one or two other categories. But I’m trying to get a sense for how large the category you focus on right now is relative to some of the other categories where you don’t have offerings today?

Linda Findley Kozlowski — President, Chief Executive Officer

Sure. I can give you a little bit of context there. I think probably we’d have to dig into some of the numbers about some of the categories above and beyond as we have further calls. And by the way, happy New Year to you as well are. It’s great to talk to you.

So specifically, though, I want to go back to what we had previously stated about our total addressable market and I think it’s interesting because what we’re seeing is that market is, of course, expanding. We had originally stated that we feel like the addressable market is around the $8 billion to $9 billion range that we could specifically address at this time, meaning what we had the opportunity to do within meal kits. And that was based on looking at the overall market size for grocery, for online grocery delivery, etc. And assuming this was about year-and-half ago, assuming a fairly rapid growth in online grocery spend.

Now, of course, what we’re seeing is an acceleration in online grocery spend, which we still see as a leading indicator. And actually, we are in the process of looking at how we can identify those expansion opportunities as they impact the $8 billion to $9 billion that we first saw as far as the potential addressable market for the meal kit industry.

I can’t quite speak yet to the market opportunity beyond that, except for to repeat that we are looking at a lot of product initiatives this year that do expand into other real locations, and we will be continuing to update on how we see those markets playing out throughout the year.

Aria Cole — Cole Capital — Analyst

Great. Thank you. And then an operational question. Regarding the meal customization. Meal customization, I know it was rolled out during the fourth quarter. So only some of your customers had it at the beginning of the quarter. On average, for the December quarter, what portion of your 350,000 odd customers had access to meal customization, the full quarter?

And then the second question is, operationally, how accurate has been, I guess, your fill rate and other things for the customization? Because I know it’s difficult to do and difficult to get 100% accuracy when someone asks for shrimp versus chicken, but just trying to get a sense for how well you are doing that.

Linda Findley Kozlowski — President, Chief Executive Officer

Yes. So I think part of the reason that we did the sort of staged rollout of — and of course, I think this is a standard practice — of this actual program is to make sure that we were accounting for any concerns or issues we might have in the process and getting the fulfillment center operation smoothly ramping up into that.

We actually very quickly went to a national rollout in Q4. So a good portion of Q4 saw full national availability of customization for our customers because we started some of the pilot rollouts actually in Q3. And so we did have pretty broad availability, although I will say that we are continuing to add customizations, particularly on the areas of protein swaps and ability to add availability to additional vegetables, etc., in the swaps. But we did get to 100% availability in December.

So we are not actually talking about the attach rate specifically to those customizations, but we did have 100% of customers be able to access those customizations. And we’re getting very, very positive customer feedback and response and attachment from those. Again, continuing to add more in Q1 and throughout the year because we do think that this is an advantage for people who are looking to either bulk up their meals, particularly for our family customers and — sorry, for our key customers who are looking to expand and add more food and/or people who are trying to manage specific dietary restrictions and/or taste preferences in their households. So it’s going quite well, and we are continuing to see success with it.

Aria Cole — Cole Capital — Analyst

Okay. Thank you. Just one last question that’s marketing related. I’ve been a customer for a long time. But my question is, for people who are not customers today, how do you more effectively convince or persuade them before they’ve become a trial customer that your solution really is better for them versus others? Because when you go on the Internet, and you type in meal kit and you read reviews, it becomes a little overwhelming as a consumer to see 10, 15 choices where the reviewers say, they’re all pretty good. So the question really is when you’re marketing to a prospect, how do you more effectively persuade them that Blue Apron today really is a very, very good solution for them versus the other competitors?

Linda Findley Kozlowski — President, Chief Executive Officer

It’s a great question, Aria. And as you know, and as we’ve said before, we do significant brand research twice per year and continue to be the number one recognized brand in the space. And so our big priority at this point is building off of that and looking at those purchase intent drivers that match with the differentiators for Blue Apron, including the fact that people are really appreciating the discovery aspects of new ingredients and new techniques. Appreciate the quality and the high animal welfare standards as well as high-quality standards of our produce. And the quality and flavor of our recipes, which really sort of go beyond your average meal, but it continue to get simpler and easier to prepare and easier to clean up from but aren’t sacrificing any of that flavor.

So, and this ties in very careful — very closely with our Wellness program as well, which is really designed to maintain all of those great things Blue Apron is known for, but help you enjoy a well-rounded, healthier lifestyle that does not necessarily sacrifice or involve restrictions in that process.

So we’re working very hard to make sure that we’re bringing those messages forward more clearly and continuing to enhance our targeting and our efficiencies and reaching those audiences so that they know the advantages of Blue Apron even before they get their first box.

Aria Cole — Cole Capital — Analyst

Good. Great. Thank you. Best of luck going forward.

Linda Findley Kozlowski — President, Chief Executive Officer

Thanks so much, Aria.

Operator

This concludes our question-and-answer session. I would now like to turn the conference back over to Linda Findley Kozlowski for closing remarks.

Linda Findley Kozlowski — President, Chief Executive Officer

Thank you very much, and we really appreciate everyone’s time on the call. On behalf of everyone at Blue Apron, we want to wish you, your families, colleagues and friends well, and let you know that our teams are working diligently and effectively to bring incredible home cooking into people’s homes. We look forward to providing an update when we report our first quarter results.

Operator

[Operator Closing Remarks]