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The online grocery store continues to grow rapidly in Norway and hundreds of millions of dollars have been invested in existing or discontinued initiatives.
What many people do not agree with is whether you want to make money from pure groceries online and eventually how much you have to sell, because no one has won yet. money in Norway.
Now, consulting firm Qvartz believes it has found the magical limit of profitability after working with various retail customers for several years.
"We believe that a pure e-commerce retailer in the grocery sector must have a business turnover of just over NOK 2 billion in Norway to reach zero" says Egil Becker in Qvartz.
In this calculation, the company assumes the following:
- The customer trades on average 1200 NOK per basket
- Each customer has 20 annual shopping baskets
- You must have a total of 84,000 unique customers
The figures are based on data on Denmark's online food trade and on Qvartz's own data on logistics and the grocery sector in Norway.
"If we take our numbers as a starting point, the potential for clean online feed in the Norwegian market is very limited," Becker said.
Kinnevik invests 300 million NOK in Kolonial.no
Must divert more than 10 citizens of Oslo
The analysis also shows how much of Oslo and its 730,000 households (1.6 million people) a network player has to divert to make it profitable.
According to Qvartz, we should have 84,000 customers, or 11.5 to 12% of the population of what is called big-Oslo to go to zero.
"Even if you manage to reach up to 20% of households, the numbers show that it will not be a very good store, but the margins will be slim anyway," says Becker.
The grocery expert Erik Fagerlid has worked with traditional grocery chains and with own network operators such as Bread Box.
He thinks that Qvartz's calculations make sense.
"It seems reasonable to me, it seems like a reasonable number," he said.
Qvartz believes that a pure actor of the online business, of which Kolonial.no is the only one, can realize an operating profit of 46 million NOK if he manages to conquer 11.5 to 12% market in all major Norwegian cities.
Assuming this to be supposed, one can see today a net turnover cap of NOK 3 to 3.5 billion for food.
Colonial: – Very strange
Karl Munthe-Kaas, entrepreneur and general manager of Kolonial.no, believes that the fact that the service can be profitable is a good thing, as its competitors and other experts have questioned the possibilities of gaining this service. .
The numbers, however, he will not talk about competitive reasons.
– I can not comment on these estimates in relation to our own situation, says Munthe-Kaas and adds:
– Other people have hypothesized that profitability was the limit of one billion NOK, but we saw that it was superior to that one.
He estimates much less than there is a 3.5 billion NOK business cap for online grocery products.
NETTMAT Contractor: For the entrepreneur and general manager Karl Munthe-Kaas, on the other hand, the turnover ceiling is much higher than what Qvartz describes in his report.
"style =" width: 100%; "aria-decriteby =" figcaption # 24586856 "/> NETTMAT Contractor: For the entrepreneur and general manager Karl Munthe-Kaas, on the other hand, the turnover ceiling is much higher than what Qvartz describes in his report.
Munthe-Kaas believes that the fact that Norwegians trade a lot online and that habits change over time will make the market much larger.
– If they think that there is a ceiling of 3 to 3.5 billion Swedish crowns, it is very strange that the market for groceries is around 200 billion Norwegian kroner and that the E-commerce market share in more mature countries is around 5 to 7% and rising. It is about changing habits over time.
According to the colonial summit, the society now serves 40 to 50% of the country's population.
Becker (Qvartz) estimates that countries such as England and Denmark, which the company studied as part of the analysis, are much more densely populated than Norway and that the calculation would be then different.
Must take for thousands at the hour
Although the Fagerlid grocery expert supports Qvartz 's estimates, he believes that e – commerce players must spend more money on marketing than the report suggests.
– The density of stores in Norway and the fact that many of us shop almost every day indicates that we need to change the habits of many Norwegians. Then you need a lot of money for massive marketing ahead, says Fagerlid, who quotes the report that estimates companies have 19 million NOK for marketing and a turnover of two billion.
In the report, Qvartz has reservations about the fact that the figure of 19 million is based on the Danish market and that it may be necessary to set up additional crowns in the Norwegian market.
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There is a reason why several large chains have not yet started buying food online: it is difficult to choose the goods in the warehouse and have them delivered to the door without losing l & # 39; money.
Qvartz estimates that the cost of the basket per basket picked up in the warehouse should be reduced to NOK 112 – an hourly wage of NOK 264 is then reached and these workers pick up goods at NOK 2400 per hour.
The consulting company then realizes that it is possible to reduce the cost of delivery per basket to 121 NOK. Drivers must then make four deliveries per hour, the customer paying an average of 50 NOK for the service.
For Becker, companies like Kolonial.no have to sell more than just food for the service to be truly profitable.
"I can not understand anything other than the fact that online grocery retailers in Norway also have to sell non-food products in order to obtain good profitability," he said. .
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