The next step for Oda is overseas expansion; following a successful round of funding in 2021, Oda launched in Finland last February, and is planning a launch in Germany in the autumn. This could be the true test of Oda’s model: it has spent the past nine years in Norway building brand equity and optimising its processes to make lower prices possible, but can it do the same abroad? Even though Oda’s launches in Finland and Germany will benefit from the tech development already carried out in Norway, as Munthe-Kaas said himself, the system needs volume in order to operate the way it should – and it will take time to build that up.
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Oda’s price parity with offline discounters was also an achievement several years in the making, and Munthe-Kaas acknowledged that in Norway, its price perception is still “tracking behind” actual prices: “When we came in[to] market, early on, we were a premium player like everyone else; we didn’t have the sourcing terms, we didn’t have the systems yet. So it’s been a gradual journey, which means we’re still, unfortunately, tracking behind – our prices are lower than our perception.” Oda will be facing this battle all over again in a new market – but Munthe-Kaas sees the situation as an opportunity: “When you think about it differently, that means that that’s going to be a continuous source of new growth, as customers realise [we’re] actually as cheap as, or cheaper than, discounters.”
Like Norway, Finland’s grocery market has relatively low online penetration, although its growth during the pandemic has still been significant; according to the Finnish Commerce Federation, online accounted for about 3% of grocery sales in December 2021, a share that has more than doubled since the start of 2020. Anne Terimo, commercial director at Oda, has reportedly attributed Finland’s low online penetration to high shipping costs: YLE News reported that Oda is hoping to undercut its major grocery rivals on delivery by offering free delivery on all orders over 40€.
Oda’s Finnish rivals have welcomed the added competition, but K-Group’s director of ecommerce expressed scepticism about Oda’s budget pricing ambitions: “In no country do these players compete on the price of products.”
In Oda’s home market of Norway, it will be interesting to see whether Oda’s affordability does succeed in changing perceptions of online grocery shopping as budget-unfriendly, and driving mass market adoption, as Munthe-Kaas believes it will. Nordic bank Nordea has predicted that due to low population density in Norway, online grocery penetration will be less than 15% in ten years’ time – “despite pure play online operator Kolonial [Oda] driving growth.”