SoftBank-backed grocery startup Oda lays off employees, refocuses operations in Norway and Sweden
Struggling Startups and the Perils of Over-Expansion
It’s not just instant-delivery startups that are struggling. Oda, the Norway-based online supermarket delivery startup, has confirmed layoffs of 150 jobs as it drastically scales back its expansion ambitions to focus on just two markets: its home base and Sweden, the home base of Mathem, an online grocery retailer that Oda merged with last year.
A Valuation Slump and a Shift in Strategy
Oda, which has raised hundreds of millions of dollars and was once valued as high as $900 million in a round led by SoftBank in its Vision Fund investment heyday, now says its aim is to become profitable in the two countries sometime next year. This shift in strategy mirrors what we’ve seen play out in the instant grocery delivery space, where a number of startups have either sold down or been acquired for pennies on each dollar raised as they have struggled to get the unit economics to work amid sluggish growth.
The Difficulties of Online Grocery Delivery
Grocery is the largest category in retail, but even the most capable organizations in the world have struggled to find an online model that works. Online grocery is hard – complex orders with perishable items and a multi-temperature supply chain in a highly price-sensitive category. Oda’s CEO, Chris Poad, wrote on LinkedIn last week (before the layoffs were announced), "Grocery is the largest category in retail, but even the most capable organizations in the world have struggled to find an online model that works."
A New Leadership and Consolidation
Poad’s very presence at the company is part of its efforts to get out of that ‘struggle.’ With past experience at Amazon, Tesco, and Google, Poad only joined the company in April himself, taking over from co-founder Karl Munthe-Kaas. Munthe-Kaas, meanwhile, left after he was reportedly asked by the board to step aside due to what Norwegian media described as Oda’s ‘foreign fiasco.’
Consolidation and Restructuring
In short, Oda, riding on hundreds of millions in funding and the pandemic boom for online grocery delivery, had big ambitions to scale across the Nordics and Northern Europe. But in 2023, the company announced plans to end its retail operations in Finland after just one year; Germany soon followed. Oda may have been retrenching its own-brand expansions, but it was also consolidating with other, existing grocery retailers: Its merger with Sweden’s Mathem came later in 2023 – a deal that Oda claimed would make it the largest online grocery retailer in the Nordics with ‘over NOK 5 billion’ ($471 million) in revenue.
A Retreat from International Expansion
Now, as Oda scales back its expansion ambitions to focus on just two markets, it’s clear that the challenges of online grocery delivery have become too great for the startup to bear alone. The decision to scale back international expansion and consolidate efforts in its home market and Sweden highlights the difficulties faced by startups in this space.
A Valuation Slump
The shift in strategy also reflects a significant slump in valuation for Oda, which was once valued at $900 million. This decline in value is a stark reminder of the challenges facing online grocery delivery startups as they struggle to achieve profitability and scalability.
The Future of Online Grocery Delivery
As Oda scales back its expansion ambitions and focuses on two key markets, it’s clear that the future of online grocery delivery will be shaped by consolidation and restructuring. With many startups struggling to achieve profitability and scalability in this space, the path forward will likely involve a focus on efficiency, cost-cutting, and strategic partnerships.
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