It’s not just dropshipping startups that are struggling. Oda, the Norway-based online supermarket delivery startup, has confirmed 150 job cuts as it sharply curtails its expansion ambitions to focus on just two markets, its home and Sweden, home to Mathem, an online grocer that the Oda merged with last year.
Oda, which has raised hundreds of millions of dollars and was once valued at up to $900 million in a round led by SoftBank in its Vision Fund investment round, he says now His goal is to become profitable in both countries sometime next year.
Oda’s retreat mirrors what we’ve seen in the grocery delivery space, where a number of startups have either been sold or bought for pennies on every dollar raised as they struggle to make the unit’s finances work amid sluggish growth. That all seemed to take off in April, when Getir, the Turkish startup that raised $2.3 billion, announced layoffs and a retreat in its home market in a bid to get out of the red.
“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. E-grocery is difficult — complex orders with perishable items and a multi-temperature supply chain in a price-sensitive category,” said Oda CEO Chris Poad. He wrote on LinkedIn last week (before the layoffs were announced).
Poad’s very presence in the company is part of its efforts to escape this “race”.
With previous experience at Amazon, Tesco and Google, Poad only joined the company in April, taking over from co-founder Karl Munthe-Kaas. Munthe-Kaas, meanwhile, left after reportedly being asked by the board to resign over Norwegian media is described as Oda’s “foreign fiasco”.
In short, Oda, with hundreds of millions in funding and the pandemic boom in online grocery delivery, had big ambitions to expand into the Nordics and Northern Europe. But in 2023, the company announced its plans terminate its retail operations in Finland after just one year; Germany soon follow.
Oda may have been cutting back on its own brand extensions, but it has also been 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 Scandinavians with “Over NOK 5 billion” ($471 million) in revenue.
Now, Oda’s has confirmed that its international expansion strategy is on hold.
The company’s state of affairs is a stark reminder of both investor exuberance ahead of 2022 and the struggles that followed as startups failed to meet growth forecasts.
Before the pandemic, Oda – founded in 2013 – carved a niche for itself as one of the strong regional players in online grocery delivery in Europe. (Others include Ocado from the UK, Rohlik in the Czech Republic, Picnic in the Netherlands and Everli in Italy.)
A nod to the pandemic and the huge increase in online shopping as people shelter in place. Through 2021, SoftBank, through the Vision Fund, led a $265 million round for the company at a $900 million valuation. But by the end of 2022 Oda had raised $151 million at a $353 million valuation.
Now, based on recent financial report from Kinnevik, its largest shareholder, the company’s value before layoffs would be just SEK 2.56 billion, or $245 million.
Layoffs are often one of the signs not only of a company looking to cut costs, but sometimes of a company looking to stabilize its balance sheet ahead of a fundraising. And that seems to be what Oda is trying to do now, based on one report. Local publication e24 says Kinnevik and other existing backers Summa Equity and Verdane are expected to provide most of the NOK 600 million ($57 million) Oda is reportedly raising. It is unclear what this will translate into in terms of valuation given the other developments.
