• Bloomberg


After spending $120 million (¥13 billion) on a stake in an online grocer in Norway, SoftBank Group Corp. has been laying out the business logic of targeting a market that boasts Europe’s highest hourly labor costs.

The deal is an example of how countries that pay average workers really well often come up with some of the smartest technology, according to Paul Davison, director at SoftBank Investment Advisers.

Norway’s biggest online grocery business, Oda, operates “in a high-labor-cost market, and grocery is a low-margin category,” Davison said in a recent interview. Because of that combination, the company “has had to build real automation capabilities and fulfillment efficiency into everything they do from day one.”

The Tokyo-based firm’s Norway investment follows significant purchases of other Nordic businesses.

Late last year, SoftBank bought a 10% stake in Swedish cloud-based platform provider Sinch AB, and recently built a roughly 15% holding in Kahoot! ASA, a game-based learning platform in Norway.

Though SoftBank is also in plenty of companies in Asia and other low-wage areas, its investment model in the Nordics suggests that cheap labor isn’t the competitive parameter it once was.

Davison said the idea was to target firms that use technology to “disrupt incumbent markets and industries.”

High-wage Nordic countries punch higher in innovation than their small populations would suggest: Sweden, Denmark and Finland rank among the top 10 in the world Global Innovation Index, alongside far richer and bigger countries including the U.S. and the U.K.

That’s reflected across industries. The countries’ banks are considered at the forefront of digitalization and payment services, with cash practically obsolete across most of the region.

Examples of Nordic technology breaking onto the global stage have proliferated since Spotify Technology SA. Klarna Bank AB, Avito, Supercell, iZettle and Trustly Group AB were all born in high-tax, high-wage welfare societies where governments invest in free education.

“We see many opportunities in the Nordics,” Davison said. “The region continues to generate exceptional founding teams, who are producing a disproportionate number of large, $10 billion-plus outcomes and leading global companies.”

“The founders and teams we meet in the region all have real clarity of vision and are not building businesses just to sell and then move on to the next one,” Davison said. “They’re focused on building unique, disruptive and long-term franchises.”

A 2019 study by Sweden’s central bank concluded technology gains hadn’t led to a drop in jobs, though service industries — including computer and legal consulting — employed a greater share of people. While that sector too will be hit, history suggests new jobs will be created, the report said.

As for Oda, the grocer now has “a strong, baseline playbook to expand internationally,” Davison said. He says the way it operates means customers are confident they can outsource the selection of their fruit and vegetables. He also says the model is “replicable in different geographies.”

“Northern European countries are unique in that e-commerce penetration is high by global standards — consumers are used to purchasing online,” he said. “But online grocery category penetration is still relatively low. That creates a special opportunity in all Northern European countries today.”

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