Food delivery startups, and particularly those focused on delivering groceries, continue to reap superb rounds of funding in Europe, supported by a year of pandemic that has led many consumers to turn to online shopping. Today, the last of them comes from Norway.
Kolonial, an Oslo-based startup that offers same or next day delivery of food, meal kits and home essentials – its goal is to provide “a weekly shop” at prices that rival those of traditional supermarkets – raised € 223 million ($ 265 million) in a round of equity financing. Along with this, the company – profitable since last year – is changing into Oda and plans to use that money (and a new name) to expand into more markets, starting first with Finland and then l ‘Germany in 2022.
The online grocery ordering and delivery market is poised to be very crowded, with hundreds of millions of dollars poured by investors into fuel tanks from a range of startups – each from different backgrounds. geographic areas, each with an approach. Oda thinks she has the right mix to be at the top of the pack.
“We have found ourselves in a unique position,” said CEO and co-founder Karl Munthe-Kaas in an interview with TechCrunch. “We have built a service targeting the mass market with instant deliveries and low prices because if you want to capture the whole cart for the family, you can’t be a premium service. We did it and we are profitable. “
And now, it will have the support of two heavyweights in e-commerce for its next steps. SoftBank’s Vision Fund 2 and Prosus (Naspers’ technology holdings in South Africa) are co-leading the cycle, with former backers Kinnevik and a strategic investor, the Norwegian soft discount chain REMA, also participating.
Munthe-Kaas confirmed to TechCrunch in an interview that Oda is valued at 750 million euros ($ 900 million) after the money.
Funding is a big step forward for Oda (the name won’t officially go into effect until the end of this month, although the company is already describing itself with the new brand, so we’ll follow suit). PitchBook data indicates that prior to this round, Oda had only raised around $ 96 million and his last valuation was estimated at just $ 178 million in 2017.
The company has certainly come a long way. Founded in 2013 by ten friends, Kolonial originally seemed to have a more modest vision in its early days: Kolonial in Norwegian doesn’t mean ‘colonial’ (a connotation that Munthe-Kaas nevertheless said the startup wanted to avoid, a great deal reason for the change), but “cornershop”. These days, Oda is focusing more on competing with large supermarkets – its average order size is $ 120 – but with a significantly more efficient cost base behind the scenes.
It has also been helped by the current climate. The online grocery store has been growing and maturing for some time now, but the last year has been a real greenhouse in this process: Covid-19, shelter in place, orders, and a general desire for people to keep their distances have all pushed many more consumers to try. shopping online for the first time, and many stayed there.
“We have seen a significant inflection point with grocery shopping over the past year with the transition of the online market, accelerated by Covid,” Larry Illg, CEO of Prosus Food, said in a statement. “Oda’s leadership and impressive growth in Norway, coupled with its breakthrough technology and ambition to expand across Europe and beyond, make it an ideal partner to seize the grocery opportunity. over the next few years. ”
Oda has grown over the years to become the industry leader in a category she arguably helped define in her home country. It was profitable last year with a turnover of 200 million euros and it currently controls around 70% of the Norwegian market for online grocery ordering and delivery on the basis of its own. particular approach of the model.
This model involves Oda building and controlling its own supply chains, from producer to consumer (not partnering with third-party and physical retailers), producing many of the products themselves (such as baked goods) to order, and using centralized processing centers to manage orders from large regions.
“Centralized warehouses mean 50 supermarkets in one place,” Munthe-Kaas said, adding that it also makes the business much greener.
These distribution centers, on the other hand, operate with “extreme efficiency,” in his own words. Oda’s grocery pickup averages 212 units per hour, which is the number of items “picked” for orders in a week divided by the number of hours per week. The next closest UPH number to the industry, Munthe-Kaas said, was Ocado in the UK at 170 UPH, and the standard, he added, was more like 100 UPH, with store selection physical (where customers themselves select items from the shelves) on average. at 70 UPH.
All of this translates into much more profitable operations, including more efficient ordering and inventory rotation, which allows Oda to achieve better margins on its overall sales. Munthe-Kaas declined to go into details of how Oda manages to achieve such high UPH numbers – that’s competitive knowledge, he said – noting only that a lot of automation and analytics data goes into the process.
It will be music to the ears of SoftBank, which has had a complicated e-commerce race in recent years, supporting a number of interesting behemoths who have nonetheless found themselves unable to improve the unity economy.
“Oda’s leadership position in Norway is a testament to its tailored, data-driven approach to delivering a personalized, holistic and reliable online grocery experience,” said Munish Varma, Managing Partner of SoftBank Investment Advisers , in a press release. “We believe Oda’s customer-centric focus, cutting-edge automation technology and execution efficiency are a winning combination and position Oda to successfully scale global to benefit customers.” and suppliers. “
The big challenge for Oda in the future will be whether it can transplant its business model as developed for Norway into other markets.
Oda will not only seek customer traction for its own business, but it will potentially do so against stiff competition from others who are also looking to expand beyond their borders.
There are other online supermarket games like Rohlik outside the Czech Republic (which in March pocketed $ 230 million in funding); Everli outside Italy (formerly Supermercato24, he also raised $ 100 million); Picnic outside the Netherlands (which has yet to announce recent funding, but it feels like it’s only a matter of time as they too have publicly presented international ambitions ); and Ocado in the UK (which has also raised huge sums of money to pursue its own international ambitions).
And there’s also the wave of companies that are building more walk-in approaches around smaller inventory and much faster turnaround times, the idea being that it can cater for both individuals and a way. different from shopping – smaller and more often – even if you are a family.
Of these so-called “q-commerce” players, covering only a few of the most recent funding rounds, Glovo last week raised $ 528 million; Gorillas in Berlin raised $ 290 million; Turkey’s Getir – also rapidly expanding across Europe – raised $ 300 million on a valuation of $ 2.6 billion as Sequoia took its first bite of the European food market; and apparently Zapp in London also closed a $ 100 million fundraiser.
Deliveroo, which went public last week, also delivers groceries (in partnership with Sainsbury’s) in addition to its restaurant delivery service.
These are, ironically, more corner replacements than Oda himself (formerly called Kolonia, or “cornershop” in Norwegian), and Munthe-Kaas says he sees them as “complementary” to what Oda does.
Indeed, Munthe-Kaas remains very attached to the basic rulebook that Oda has been living for years.
“You have to beat the physical stores on quality, selection and price and have it delivered to your doorstep,” he said. “This is a margin business and the only way to optimize is to be completely relentless.”
But he also understands that this may eventually need to be changed depending on the market. For example, although the company has not worked with other retailers in Norway – even REMA’s investment is not for distribution but for better economies of scale in purchasing products than REMA and Oda will sell independently of each other – this could be a path that Oda chooses to enter other markets.
“We are in talks with several other retailers, wholesalers and producers,” he said. “It’s important to get supply terms and to have upstream logistics, but there are many ways to do this. We are very open to forming partnerships on this front, but we still believe that the way to win is to manage the value chain. “