Trade Norwegian online food store comes to Finland and challenges K-store: “In no country do these players compete on the price of products,” says the K-Group

Norwegian food online store Oda will soon start delivering food to homes in the Helsinki metropolitan area.

Test customers who have signed up for Oda’s service have already received food orders before Christmas, but the deliveries are only in trial use.

Odan’s Finnish leader Tobias Niemi says there has been some refinement in the deliveries at first.

In April, the company announced its intention to enter the Finnish market by the end of 2021.

Odan The operations are based on one large collection center near Helsinki-Vantaa Airport, where robots and collectors pack up consignments for transporting Oda’s own cars home.

Oda is especially aimed at subscribing to households a couple of times a week. The flow of distribution is greatly improved if there are many customers at the destination.

However, offering a wide range to customers profitably is difficult, especially in the early stages.

“It’s a lot easier to bring bread from a convenience store to your door in half an hour for an additional fee than to bring your entire week’s grocery shopping home for free or a small home delivery fee,” explains Oda’s founder and CEO. Karl Munthe-Kaas in a video call.

He gets up, turns his laptop screen towards the white board next to him, and first shows an example of a distributed model where food is picked up from different restaurants and shops, for example, and then taken to different homes.

Then there’s Oda’s model: the goods leave the collection center in one car for a certain area, where the car goes around taking the food bags quickly to nearby residents.

Cars and drivers must already have their own to ensure the level of service, Munthe-Kaas says. A truck weighing three and a half tons typically has a hundred boxes that are exported to about 35 customers.

“It’s a demanding process. Because of the cold chain, it is good to keep transport in your own hands. ”

In Norway Oda, founded in 2013, has achieved a 70–75 percent share of the online food store.

International venture capitalists since Japan’s Softbank have set out to fund Oda’s European expansion, mainly for one reason, Munthe-Kaas says. That reason is the speed at which Oda’s stocks are picked up: the time it takes for customers ’orders to be collected on average for shipments so that the shelves are also filled.

According to Oda, the rate was 212 units per hour, compared to around 170 products for the Ocado Group, the market leader in the sector, worth more than € 14 billion.

“The reasons for our efficiency are our best kept secrets,” Munthe-Kaas says.

Food collection is a weak point in the K and S chains in Finland, for example.

Goods and food first arrive at the central warehouse. From there, they are transported to stores, from where they are typically collected according to customers ’wishes in bags and boxes, which are then delivered to homes.

Munthe-Kaas gets up from his chair again and this time draws the value chain of a typical central store: from a producer, farm or factory to a wholesaler first and then to 50 stores.

In Oda’s model, the food comes from farms or, for example, from the Coca-Cola manufacturer to a sorting center and from there to Oda’s cars.

“In Norway, we deliver food to the customer’s door cheaper than the K-store even gets it at the checkout,” says Munthe-Kaas with satisfaction.

His in its view, it is by no means effective for competitors to collect their own orders in a shopping cart from the various shelves of a regular grocery store before distribution.

“Even if nothing counts, you will understand why Softbank and other financiers chose us.”

When there are a lot of deliveries, operations are efficient and Oda can make a profit on every delivery, Munthe-Kaas explains.

On the other hand, if delivery volumes are small, fixed costs will erode profitability. The volume of activity must therefore be large enough to allow robots and their own workers to work 16-24 hours a day.

But if gambling pays off, the winnings are big too.

K-Group e-commerce manager Antti Rajala says that Kesko takes competition seriously and is currently developing its online store to be partly automated.

“We have a highly efficient grocery chain that utilizes high volume and centralized Kesko logistics, as well as local agility at the retailer level. It brings competitive prices and the widest selection, ”Rajala lists the K-Group’s strengths.

“Yes, we believe we can offer competitive prices with these.”

Rajala says that Finland has lacked a clean online player in the food trade, as has already been the case in other Nordic countries and, for example, Britain.

“To my understanding, in no country do these gamblers compete on the price of products.”

Traditional large stone-foot shops have also fared best in the online food store, Rajala says. He cites, for example, the recent success of ICA in Sweden, Tesco’s strong position in the UK and Walmart in the United States.

Food business is huge in Europe alone, and that is why large investors have been prepared to give Oda hundreds of millions of euros in risk money for its expansion.

Oda is making a loss due to ongoing expansion projects in Finland and Germany. In Norway, operations are already profitable.

In the first half of 2021, the company’s result was positive, Munthe-Kaas reveals. He estimates that collecting Oda would be about three times as efficient as collecting from grocery stores.

In Norway, Oda’s employees collect two million products a week. That means 10,000 working hours a week.

“Compare that to the 20,000 extra hours a week we save.”

Odan Tobias Niemi, President and CEO of Finland, refuses to disclose anything about the company’s “opening” in the Helsinki metropolitan area other than that they are imminent.

“A kind of soft launch,” Munthe-Kaas says.

Trial users have blamed the service for a variety of shortcomings. “Bananas, for example, have run out,” says one test user.

According to Niemi, Finland Oda now has 75 employees, many of whom are in administration. The hiring of operational staff, such as collectors and drivers, has already begun, typically by first selecting the leaders of the different teams, Niemi says.

“In the coming weeks, we will hire people quickly.”

Managing director According to Munthe-Kaas, the opening of operations in Finland is important because it is also the starting point for Oda’s conquest of Europe.

“We don’t just sell to save time. We also have to win in terms of price, quality and shopping experience, ”says Munthe-Kaas.

According to him, only through these means can e-commerce grow from the current premium service to the mass market.

In Germany, Oda has already signed contracts for the construction of three distribution centers. Munthe-Kaas refuses to disclose their location.

“But Finland is the first country after Norway.”

Munthe-Kaas compares the Finnish food courier company Woltia, which was sold as a EUR 7 billion share exchange, to its own startup.

“Wolt’s ingenuity is that the company has managed to create an efficient platform between customers, restaurants and retailers. And they have been able to expand that model at a world-class pace. ”

Oda, in turn, changes the entire food purchasing chain down to the producer, Munthe-Kaas says.

“We work differently, but for the customer, the two services are mutually supportive, and we can grow side by side.”

The downside to a distributed model, he estimates, is that the model is quite easy to copy.

“We’re not doing it because it’s easy, it’s because it’s hard.”

When Oda’s complex, highly automated centralized distribution system, developed over eight years, is difficult to make, it’s harder to copy.

And when Oda’s model requires large upfront investments, it will be more difficult for new players to enter the market, Munthe-Kaas estimates.

German distribution centers are scheduled to open next year.

Munthe-Kaas estimates that if 10% of the German grocery market were to go online, the distribution would be € 24 billion a year.

The size of the grocery trade in Europe as a whole is already EUR 1 500 billion, Munthe-Kaas points out.

“Germany needs a hundred centers the size of a Helsinki distribution center. This is a real race – who are building the new infrastructure. Someone has to do it, and we are the only ones who know how to do it effectively. ”