The Oddbox growth dilemma
INTERVIEW. Oddbox has been on a tear since the pandemic but does the business model still work now it's so big? Its co-founder spoke with Field7.
In 2016 Oddbox’s husband-and-wife founders observed the scale of food waste by supermarkets and wrapped a business around it.
After delivering over 5 million boxes, the pair find themselves facing a set of challenges which pit its explosive growth against its original principles.
I had a chat with co-founder Deepak Ravindran.
Welcome to the Field7 newsletter
“We always knew that for us to make a big impact we had to get beyond the people who can cook a cabbage seven ways”
The headaches of scale, in a nutshell:
🛒Can Oddbox offer choice?
🥦Will there be enough supply of unwanted food to meet demand?
👩🏼🌾Are farmers now treating Oddbox like a supermarket?
🗑️What to do with customers throwing away their fruit and veg?
🚚Can the company bring down its transport and packaging emissions?
🧾Will customers stomach a price increase amid a cost of living crisis?
“We’re flipping the system from consumer to grower”
One of the many remarkable overnight transformations in 2020 was how buying groceries online became public health policy. Entering a supermarket involved running the covid gauntlet and returning home with no toilet roll and six packets of couscous.
Supermarket websites were no better. Sites kept crashing or had no delivery dates available.
Wasteman
Emerging out of this was the phenomenon of the weekly veg box. One of a handful of companies to make a name for itself was Oddbox.
Its income rocketed from £3.4m in 2019 to over £30m in 2021.
The explosive growth hasn’t been exclusively pandemic-fuelled. More people have been connecting the dots between the food we buy and the climate crisis. The enormity of wasted food is particularly galling - a third of all food produced globally is thrown away.
An Oddbox food delivery has proved an attractive twist on the grocery delivery format. The recipient discovers a random selection of unwrapped fruit and veg rejected by supermarkets, deemed mis-shapen or over-ordered.
Pricing in waste
In the early days, however, the problem was supply. Convincing growers to take money in exchange for food they would be chucking was an unexpected hard sell. “The mentality is that the cost of selling 80 of anything is to grow 100,” Ravindran explained.
A breakthrough came in the form of an apple grower, with an attitude best described as lukewarm. He acquiesced to a visit from Ravindran. “He showed me some slightly hail damaged apples which ended up going into juices or animal feed.” The farmer agreed to sell them to Ravindran instead.
“I’ve been explaining to farmers that we’re flipping the system from consumer to grower,” he adds. “They’ve been at the mercy of supermarkets. We came along and said, ‘Forget the specs we will take whatever you have’.“
Mo money, mo problems
After pootling along for some time in a smattering of London postcodes since it launched in 2016, Oddbox’s sign-ups spectacularly took off since the first lockdown. It stopped taking orders in the early weeks as its supply chain and internal systems risked buckling. An intense few round-the-clock days were spent upgrading the infrastructure to cope with a vastly bigger business. It was a worthwhile investment.
Its customer base accelerated to over 75,000 customers. Deliveries have jumped by a factor of five in the last three years. Oddbox is now available to two thirds of the entire country.
Investors have responded favourably to its calls for funding to help it grow. It has raised £20m across five rounds, and will soon close off another £5.5m.
That initial promise of orienting towards growers instead of consumers is being tested as the company tries to reach more people.
The new investment will go towards crossing beyond the devotees. Personalisation and larder food is coming but is it enough to solve those growing pains? Ravindran discussed the seven biggest challenges…
1. Growers growing for Oddbox
Field7: When you started, Oddbox operated in the cracks of the supermarket supply chain. Now it’s considerably bigger, do growers now actively seek Oddbox out, considering it a valuable sales route like they would a supermarket? Doesn’t this defeat the idea of Oddbox simply scooping up excess fruit and veg?
Deepak Ravindran: “It’s definitely an issue. There might be some medium sized growers who might factor us in. We have 160 growers to ensure that doesn’t happen.
We always ask if they’re growing from us, so we limit from them. Eventually at some point in the future, we will be really big and we have to cross that bridge when we get there.”
2. Not everyone wants random
F7: So far Oddbox has been attractive to the environmentally ideological and culinary creative. But I’m guessing the randomness and surprise of a box containing, say, turnips, radicchio and kumquats is likely to bamboozle and even irritate a mass consumer. Is the current investment round aiming to reach people who have more conventional shopping habits?
DR: “We already build 50 per cent of our box with staples like potatoes, onions, apples where there is always waste, so people are well catered for that. Some we keep open as last minute rescues. Our buyers are calling growers with specific asks like ‘What salad do you have? What root vegetables do you have?’. We want to have balance.
A lot of our work is trying to push people and educate people on how they can use fruit and vegetables they’ve not cooked with before so we send tips and ideas.
But we always knew that for us to make a big impact we had to get beyond the people who can cook a cabbage seven ways. We have to reach families, for example, who have kids and want broccoli and sweet potato every week.”
3. Customers throwing out uneaten groceries
F7: Eating through the content of the veg box until the next one arrives can be a stress. Are households throwing away more groceries via Oddbox compared to conventional shopping?
DR: “Our whole thing from the start was that we we are a grower-led rather than consumer-led, but clearly it’s pointless if we’re just moving where the food is being wasted. Also people will just leave us if they’re throwing out food. It goes back to the challenge of customisation at scale for us. It’s a top priority and we’re working on it.”
4. The cost-of-living crisis
F7: An Oddbox subscription isn’t cheap - £11 a week for the cheapest option. Oddbox recently increased its prices - 50 pence per box, plus a new £1.49 delivery charge. Do you worry an Oddbox subscription is an easy one to ditch when household bills bite?
DR: “Yes, this is an issue for us. In the short, short term, we had a challenge with consumer demand. Inevitably there will be peaks and troughs. People are clearly facing an increase in their energy costs and that hurts us. Over the last year, we’ve seen costs go up in pretty much every area of our business – from energy and fuel, to packaging and the fruit and veg we rescue from growers.”
5. Vans
F7: Even with clever routing software, delivering boxes to every Oddbox customer’s front door carries a hefty emission count. How serious is Oddbox about the cost of its emissions?
DR: “We’re looking at final mile delivery with the aim of moving to only using electric vehicles. We currently work with a third party logistics company and talk to them about how quickly they can make the shift to their fleet. They’ve promised to be all electric by 2030. It will be a big milestone. Clearly, there’s a challenge in range and payback in electric vehicle investment.”
6. Cardboard packaging
F7: A lot of the fruit and veg is loose. But what about the boxes?
DR: “Some the produce comes to us from growers in cardboard and we use cardboard to send to customers. It uses a lot of energy. Our aim is to reach a circular system to avoid cardboard waste, and reusable crates is what is probably the best solution.”
7. Enough wasted food
F7: What if your customer grows so large that it outstrips supply of bin-bound groceries?
DR: “We are always looking for more growers in the UK and Europe, but it’s possible there is a day where there isn’t supply. If there’s no food waste in the system, we’d be very happy. And at that point we have to call it a day and find another climate change problem! For now there is sadly plenty of waste.”
It was great to get the feedback from the last issue. I’m currently trying to work out whether it’s better to do these in depth feature interviews, or the more fragmented mix of updates and stories. Or perhaps both. What do you think? It would be enormously helpful to hear which you prefer.
Also, as ever, please take a second to forward this on to anyone you think would find it interesting.
Thank you,
Soheb
Great article, good length, engaging and helpful!