Instant delivery startups aren't the only ones struggling: Norway-based online supermarket delivery startup Oda has significantly scaled back its expansion ambitions and announced 150 job cuts to focus on just two markets: its home base and Sweden, home to online grocer Mathem, which it merged with last year.
Oda, which raised hundreds of millions of dollars and was once valued as high as $900 million at the height of the SoftBank-led Vision Fund investment, has said it aims to be profitable in both countries within the next year.
Oda's exit mirrors what's happening in the instant food delivery industry, where a slew of startups struggling to make their unit economics work amid slowing growth have been sold or acquired for a fraction of the capital they raised. It all seemed to come to a head in April, when Getir, a Turkish startup that had raised $2.3 billion, announced job cuts and an exit from its home market to pull out of the red.
“Grocery is the largest category in retail, yet even the most capable organizations in the world are struggling to find an online model that works. Online grocery is hard: complex fresh food ordering, a highly price-sensitive category, and requires a multi-temperature supply chain,” Oda CEO Chris Poad wrote on LinkedIn last week (before the layoffs were announced).
Poad's very presence at the company is part of an effort to get out of that “struggle.”
Poad, a former Amazon, Tesco and Google executive, joined the company in April, succeeding co-founder Karl Munte Kaas, who left after being reported by Norwegian media to have been asked to step down by the board over what Oda described as “missteps abroad.”
So, armed with hundreds of millions of dollars in funding and riding the pandemic-induced boom in online grocery delivery, Oda had big ambitions to expand across Scandinavia and Northern Europe. But in 2023, the company announced plans to shut down its retail operations in Finland after just a year, with Germany soon to follow.
Oda may have been scaling back on its own brand expansion, but it was also integrating with other existing grocery retailers. A merger with Sweden's Mathem is scheduled for the second half of 2023, and Oda claims the combination will make it the largest online grocery retailer in Scandinavia, with revenues of “more than NOK 5 billion ($471 million).”
Now, Oda has admitted to postponing its international expansion strategy.
The company's current situation is a stark reminder of both investor enthusiasm pre-2022 and the difficulties that followed as the startup failed to meet growth projections.
Before the pandemic, Oda, which was founded in 2013, had established itself as one of the stronger regional players in online grocery delivery in Europe (others include Ocado in the UK, Rohlik in the Czech Republic, Picnic in the Netherlands and Everli in Italy).
As the pandemic hit and people stayed home, online shopping soared. By 2021, SoftBank, through its Vision Fund, had led a $265 million fundraise for the company at a $900 million valuation. But by late 2022, Oda had raised $151 million at a $353 million valuation.
According to the latest financial report from Kinnevik, now the largest shareholder, the company's enterprise value before the job cuts was just 2.56 billion Swedish kronor, or $245 million.
Layoffs are often a sign of companies looking to cut costs, as well as shore up their balance sheets ahead of fundraising. That appears to be exactly what Oda is now attempting, according to one report. Local newspaper e24 reports that Kinnevik and other existing investors Summa Equity and Verdane will provide the bulk of the NOK 600 million ($57 million) that Oda is said to be raising. It's unclear how that will affect the valuation, given other developments.