Oisix’s huge success – will it continue?

Oisix, a Japanese food and grocery delivery service, has experienced a huge growth during the pandemic, by responding rapidly to customers' needs. It potentially could change the way people do grocery and cook even after the pandemic.

The COVID-19 pandemic has shifted our ways to do grocery, cooking and eating. More people are now comfortable using online grocery to buy ingredients for their dinner. More people, especially with kids at home, are getting tired of cooking three meals every day. And more people are utilizing delivery food services to richen their menu, while being cautious about their health.

Oisix ra daichi Inc. has been one of the companies that have seen a tremendous success during the pandemic. Oisix is a Japanese company that provides a food delivery service, with a unique concept of “providing food that parents feel safe to feed to their children”. Its products include organic fresh produces, processed food with minimum additives and meal kits. Customers sign up for a regular delivery without any subscription cost and can change products in their next delivery or cancel their delivery if they wish to do so.

Figure 1: Oisix’s products

Over the past months, the company has enjoyed 146% increase in its revenue, 347% increase in its EBITDA and 441% increase in its operating income compared to the previous year in the second quarter of 2021. Such success was driven by the increase in the number of users and in Average Revenue Per User (ARPU). It has seen 121% increase in the number of users and its ARPU has increased by 122% compared to the previous year. [1]

Figure 2: Oisix’s performance

user

 

What made them so successful? Obviously, the restriction on restaurants’ operation and people’s fear to go out have helped the company to acquire more users. Customers now value the delivery more than ever. Oisix’s no subscription cost and no delivery fee (if the order exceeds around $40) also seemed to help customer try out their service more easily.

In addition, Oisix has been active in responding to customer’s demand arising from the pandemic. First, in response to the customers’ demand for shorter cooking time and healthy eating, Oisix expanded its meal kit product line with a focus on convenience and healthiness. For instance, the sales of “Vegan Kit” increased by 1.6 times compared to the previous year as a result. [1]

Figure 3: Image of Vegan Kit

Oisix also saw an opportunity in collaborating with restaurants that were suffering from the pandemic. It reached out to many restaurants and worked together to create new meal kits with which customers can recreate the restaurants’ dish at home. This new product line called “Home Restaurant” was especially a success as it served both the customers’ needs to eat delicious food at home with easy steps and the restaurants’ needs to increase non-store sales. [2]

Oisix did not stop here. In November 2020, it started a project called “Table for Tomorrow” in collaboration with Disney. It provides new meal kits targeting family with kids, featuring beloved Disney characters. This product seems to address parents’ need to make their dinner table more fun for their kids and also their wish to provide heathy food for kids without spending too much time. [3]

Figure 4: Image of product from Table for Tomorrow

With the rapid increase in the demand, the company faced several challenges including shipment capacity and latency in their web site. However, it was able to quickly solve these issues by investing in their shipment center and conducting server maintenance.

Will it be able to continue winning even as the pandemic declines? The critical question is whether Oixis can change people’s purchasing behavior. Japan has been one of the countries where grocery delivery has not been flourished mainly due to people’s purchasing behavior. People tends to do grocery frequently in physicals stores because of the limited space available in houses to store food, easy access to physical stores and attractive daily discounts in supermarkets. The decline in pandemic is likely to make people to return to their previous purchasing behavior. However, it could be said that now that more people have experienced the convenience of the service and its healthy and high-quality products with good tastes, Oisix has a potential to be utilized as a complement to typical grocery in supermarkets by providing variety of meal kits. In addition, Oisix’s unique philosophy helped to build brand and gain traction from parents who, in the past, avoided meal kits, thinking that they are unhealthy and unsafe.

On top of that, the relationship with the famous restaurants the company was able to build during the pandemic will be an important asset going forward to further enhancing their product lines. The company definitely should leverage such relationship to differentiate themselves from competitors.

Oixis has enjoyed a tremendous success. Now it is time for Oisix to further examine the post-pandemic strategy to keep attracting customers and making grocery and meal kit delivery as a default way of doing grocery.

 

[1] Oisix ra daichi Inc. 2021. FY2021 2Q IR report. https://www.oisixradaichi.co.jp/wp-content/uploads/2020/08/7b8cf4d205cd40a1b486a786aee6ac6b-1.pdf

[2] “Oisix, a company that overcame the rapid demand increase by increasing the shipment capacity, experiences huge revenue growth in the first half of 2020. What would be their next move?”. 2020. Diamond Chain Store Online. https://diamond-rm.net/market/69307/2/

[3] Oisix ra daichi Inc. 2020. Press Release. https://www.oisixradaichi.co.jp/news/posts/20201112tablefortomorrow/

[4] “Report on views and behavior on grocery and eating”. 2018. Ministry of Agriculture, Forestry and Fishries. (https://www.maff.go.jp/j/finding/mind/attach/pdf/index-12.pdf)

 

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Student comments on Oisix’s huge success – will it continue?

  1. Thanks for sharing this story about a unique Japanese company! I find it impressive that Oisix was able to grow its revenues while cutting costs significantly, especially during the pandemic. It seems that the company doubled its EBITDA margin and tripled its operating margin. Was it economies of scale that drove that enormous margin expansion? Or did they start to promote higher margin healthy products while cutting lower margin staples? I also think that the pandemic was a major tailwind in this growth and I am interested to see how the company continues to grow its revenues and user base as life gradually returns to normal and more people revert back to in-person grocery shopping and restaurant dining.

  2. Thank you so much for this! I am amazed by the company’s expansion of its “Meal kit product line”. I don’t think I have seen any company in my home country, Thailand, trying to address this specific need. People are definitely spending more time indoor and cooking a meal together is always fun. I can imagine the level of convenience this kit brings to the customers. I also noticed from an article that DIY cooking trend has been growing sharply even prior to the COVID-19 pandemic and will likely continue to grow post the pandemic. One idea is for the company to also hold virtual cooking classes using its meal kits.

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