A Norwegian grocery delivery challenger arrives in Finland

A Norwegian grocery delivery challenger arrives in Finland

After following the instructions related to epidemics to stay at home during the last couple of years, Finland’s two largest retailers, the K-Group and the S Group, have grown strongly in grocery distribution services.

About a week ago, the Norwegian distribution company Oda quietly entered the Finnish market and started operating in some parts of Helsinki. The company has plans to expand to other parts of the Helsinki metropolitan area and later to other parts of Southern Finland.

Unlike its Finnish counterparts, Oda does not sell goods from stone foot shops. Customers must use the smartphone application to order products that are delivered from the Vantaa Central Logistics Center near Helsinki-Vantaa Airport, where the products are collected for delivery.

The company claims that its highly automated logistics centers operate much faster than any of its competitors around the world. The company has raised hundreds of millions of euros from international investors, which it says will help with the planned expansion into the German market later this year.

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Oda delivery vehicle fleetEsa Syväkuru / Yle

Finland’s third largest grocery chain, the German Lidl, has so far not offered online sales, while the distribution companies Wolt and Foodora offer similar services but do not have a large market share, so the K and S groups will remain in the market. largest market shares.

Norwegian entrant plans to compete directly with the two largest players, offering relatively cheaper prices and extended delivery times, according to Oda’s commercial director Anne Terimo.

He said that high delivery costs have been one of the biggest contributors to the relatively sluggish growth of the Finnish home delivery market.

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Anne Terimo, Commercial Director of Food Online Store ODA
Anne TerimoEsa Syväkuru / Yle

Free shipping

Although the two major players usually charge around € 10 per delivery – and sometimes offer a service for as little as a few euros – Oda plans to offer free delivery on all orders over € 40.

In price comparison newspaper Iltalehti found that although the prices of Oda’s listed products were generally higher than those of its local competitors, the K and S Group’s delivery costs made Oda a cheaper alternative.

Retail consulting firm Ada Insights Arhi Kivilahti said it believed that the arrival of Oda would soon lower the delivery prices of its competitors.

"As there is more competition, supply will improve, cheaper – and perhaps even better – options will arrive and customers will then start demanding it from other retailers as well." Kivilahti explained.

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Arhi Kivilahti
Thomas Hagström / Yle

Although the grocery delivery market in Finland is small compared to countries such as Sweden and the United Kingdom, it is expected to grow. The Covid crisis helped raise the share of home delivery in the total grocery market market from 0.6 per cent in 2019 to 3 per cent last year. In Sweden, the grocery store’s share of the total market was estimated at 5.9 per cent last year and in the United Kingdom at 10.9 per cent.

Kivilahti said that the online grocery market in Finland will double – to the current level in Sweden – within three or four years.

EUR 20 billion piece

The value of Finland’s grocery trade is more than 20 billion euros a year, which means that even a small part of the market is significant, according to Kivilahti. For example, five percent of the total is about one billion euros.

The retail consultant himself tried to get into the online store by starting express delivery in 2018. But investor support ended in 2019, he explained on their company website.

Oda has invested heavily in automated collection and transport logistics since it started delivering groceries in Norway in 2013.

"Efficiency leads to lower costs, which can then be passed on to customers in the form of lower prices," The company Termio said

Oda currently offers about 5,000 products and the K-Group’s largest stores about 40,000 products. At the same time, about 35,000 different products are available from the S Group. However, both domestic retailers also offer a variety of consumer goods on their websites.

The K-Group is planning to open a centralized, automated collection system in Helsinki this summer, while the S Group is still considering starting operations.

Source: The Nordic Page

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