It’s not only quick delivery startups that are struggling. Oda, the Norwegian online supermarket delivery startup, has confirmed the layoffs of 150 employees, drastically scaling back its expansion ambitions and focusing on just two markets – its home base and Sweden, the home base of Mathem – the online food market that Oda connected with last yr.
Oda, which has raised a whole lot of hundreds of thousands of dollars and was once valued at $900 million in a round led by SoftBank during the Vision Fund’s investing heyday, he’s talking now its goal is to be profitable in each countries next yr.
Oda’s exit mirrors what we have seen in the quick grocery delivery industry, where many startups were either sold or acquired for pennies on the dollar raised as they struggled to make unit economics work amid slow growth. It all looked as if it would come to a head in April, when Getir, a startup from Turkey that raised $2.3 billion, announced layoffs and a withdrawal from its home market in a bid to emerge from the crisis.
“Grocery is the largest category in retail, but even the world’s most capable organizations have struggled to search out an online model that works. Online grocery is difficult – complex orders involving perishable items and a multi-temperature supply chain in a highly price-sensitive category,” Oda CEO Chris Poad he wrote on LinkedIn last week (before the layoffs were announced).
Poad’s mere presence at the company is a part of its efforts to emerge from this “fight.”
With experience at Amazon, Tesco and Google, Poad himself only joined the company in April, taking on from co-founder Karl Munthe-Kaas. Meanwhile, Munthe-Kaas left after the board reportedly asked him to step down following what Norwegian media described as Oda’s “foreign fiasco”.
In short, Oda, benefiting from a whole lot of hundreds of thousands in funding and the pandemic boom in online grocery delivery, had big ambitions to expand its business into the Nordics and northern Europe. But in 2023, the company announced plans discontinue retail operations in Finland already after a yr; Coming soon Germany followed.
Oda may have been limiting the expansion of its private label, but it was also consolidating with other existing grocery retailers: its merger with Swedish company Mathem took place at the end of 2023 – under this deal, Oda would turn out to be the largest online grocery retailer in the countries Nordic z “over NOK 5 billion” ($471 million) in revenue.
Now Oda’s has confirmed that its international expansion strategy has been postponed.
The company’s situation is a stark reminder of each investor enthusiasm ahead of 2022 and the difficulties that have ensued when startups have failed to fulfill growth forecasts.
Before the pandemic, Oda – founded in 2013 – had established itself as one of the strong regional players in the online grocery delivery market in Europe. (Others include Ocado in the UK, Rohlik in the Czech Republic, Picnic in the Netherlands and Everli in Italy.)
Consider the pandemic and the huge increase in online shopping as people shelter at home. By 2021, SoftBank, through its Vision Fund, led a $265 million round for the company at a $900 million valuation. However, at the end of 2022, Oda had raised $151 million at a valuation of $353 million.
Now, based on the latest Financial Reporting from Kinnevik, its largest shareholder, the company’s pre-layoff value could be just SEK 2.56 billion, or $245 million.
Layoffs are often one of the signals not only that a company desires to cut costs, but sometimes also that it desires to strengthen its balance sheet ahead of a fundraising event. And it looks like what Oda is attempting to do now is based on one thing report. Local publication e24 reports that Kinnevik and other current backers Summa Equity and Verdane are expected to contribute most of the NOK 600 million ($57 million) Oda is reported to be raising. It’s unclear what this can translate into in terms of valuation given other developments.