We at Columbia Road think that food sales is going to be one of the key drivers for a new wave of ecommerce. Digitalisation enables totally new business models and services, but even more, the revolution is going to lie in the change of customer behaviour. And that is going to drive this growth.
While living in the UK, me and my family got used to ordering all our groceries from Ocado which is an online-only super market. Having two small kids, this was the most convenient way to buy food. While Finnish supermarkets are slowly improving their online stores, we wanted to get know a couple of local challengers who are trying to enter the same market and address the need with two different approaches.
So, we invited the founders of Wolt and Epic Foods to visit and educate us.
Oskari Petas, co-founder of Wolt, gave us a presentation at our breakfast event a few months ago. Many people asked them when will Wolt start delivering other things that food. However, although Wolt’s service is built around delivery, the customer need they aim to solve is hunger. Steering focus towards delivery in general would lead to a sub-optimal customer experience when their customers want to get food from the restaurant of their choice - conveniently. Convenience comes not only from selection, delivery time, personal service, keeping the food warm, and such, but also from enabling seamless payment which the likes of Uber do very well. “People love to buy, but hate to pay” Oskari commented.
We also had the pleasure of having Martti Paatela, CEO and founder of Epic Foods, give us the company pitch at our brick & mortar office - after the Epic lunch we enjoyed ;)
Epic Foods launched a year ago as the first cloud restaurant in the Nordics. Their idea is to compete with the fast food segment with healthy premium meals, cooked of quality ingredients by Epic’s own chefs, who come from Savoy and Palace. Epic Foods targets a 10€ price point - including delivery - by keeping the lunch menu small and well standardised, avoiding expensive brick and mortar rental costs and optimising the delivery process. The target delivery time is only 26min. Epic Foods has their own delivery network and control room, but they also partner with other delivery services like Wolt and prepare for Uber Eats entering the global food delivery market with their deep pockets. So the value proposition really is about the efficient process of creating quality meals, although delivery time is an important part of the experience.
Epic Foods started in the workplace lunch segment but are now trying to enter the home meal market - about 10% of their customers are actually seniors who have replaced home care food with better quality and taste. Their most typical customer is an over 30-year-old female.The Epic Foods digital service consists of a mobile app and web site, but the food is paid to the driver - often with lunch coupons. Mobile Pay as a payment option will be introduced next, Martti said.
Wolt and Epic Foods are solving the same customer need with different offerings and value propositions (selection vs. high quality), both focusing on process efficiency and customer experience. Between ready meals and online grocery shopping there is the rising food bag and meal kit business where for example Linas Matkasse made a 98M€ revenue last year in Sweden and Rocket Internet’s Hello Fresh recently filed their IPO at the point of $290M in annual revenue in 2015 ($3M in 2012).
We are excited to see how the Finnish food eCommerce scene takes off and are keen to be part of that change!