Image: Archi Banal
Image: Archi Banal

IRLMarch 16, 2022

Do we want rapid grocery delivery in NZ? 

Image: Archi Banal
Image: Archi Banal

Ultrafast delivery – where groceries arrive within 20 minutes – is already a reality overseas, but whether it’s possible, or desirable, in Aotearoa is an open question. Shanti Mathias investigates for IRL

In other parts of the world, this future already exists. In Sydney or Singapore, London or New York – the usual suspects for any novel technology product – you can feel a craving for apples or hummus, tap a few buttons on your phone, and have the groceries delivered to your home within 20 minutes. This is ultrafast grocery delivery. 

The rapid delivery model currently only exists overseas, but similar services could appear in New Zealand cities within the year. In December, Uber launched a trial partnership with Foodstuffs, allowing customers at select stores across the North Island to order groceries through its app for delivery within an hour, while Australian rapid-delivery company Geezy Go said it would launch in Auckland in January, although they appear not to have done so (and didn’t respond to The Spinoff’s requests for comment).  

In a moment when Covid continues to normalise online grocery ordering, and supermarket chains enjoy a ridiculously profitable duopoly, rapid delivery could be widespread soon. How might it reshape urban life in Aotearoa?

Delivery services like Door Dash and Deliveroo dominate the ‘convenience grocery’ sector overseas. (Photo: Andrew Harrer/Bloomberg/Getty)

Generally speaking, the internet has transformed the “getting things to places” industry, with services like Uber and Ola largely undercutting the traditional taxi industry with discounts supported by venture capital money. Then businesses like Uber Eats, Deliveroo, and New Zealand’s Delivereasy changed how restaurant delivery works, making it straightforward to order meals without leaving the house. Groceries, which don’t require long wait times at restaurants, are next in the sights. “We’re making it even easier for Kiwis to find an everyday use case for Uber,” an Uber spokesperson said of their grocery delivery services. In a well-established delivery market, the way to compete seems to be to go faster. 

The focus on grocery items among delivery businesses has been growing for years, aided by a surge in demand from those spending more time at home due to the pandemic. In Aotearoa, the grocery market is particularly lucrative, with the vast majority of supermarkets controlled by Foodstuffs and Woolworths, the companies that own Pak’n’Save, Four Square, New World, Countdown and Fresh Choice between them. 

A report investigating the effects of this duopoly was released by the Commerce Commission last week, and it recommended a range of regulatory tweaks to make it easier for smaller players to access the big companies’ wholesale trade. With New Zealand having the fifth most expensive groceries in the OECD, economists agree that these measures are likely not enough to abate the high prices and record profits of supermarket operators.

Founder Sarah Balle says Supie is focusing on getting fresh, healthy food to every New Zealander, not on rapid delivery. (Photo: Supie)

“The status quo should not be allowed to continue; [the current state of supermarkets in New Zealand] is not acceptable,” says Sarah Balle, sounding tired; she’s been doing interviews about this all day. As the founder of Supie, an online-only supermarket that delivers, she has a vested interest in things changing. 

She’s seen the rise of rapid delivery start-ups overseas; does she think it could work here? “New Zealand is more geographically spread, our cities don’t have so many transport hubs,” Balle says. Of the range of practical challenges that could determine the future of rapid delivery in Aotearoa, the issue of density comes up first: the aspirational quarter-acre does not make for the compact living that is required if companies want there to be enough customers in a 20-minute radius. 

Nick Foster, director of Wellington-based delivery company Delivereasy, agrees that urban density places a limitation on the delivery business. But his company has been able to expand into smaller towns in New Zealand like Masterton, Blenheim and Invercargill, chiefly because of rising demand post-Covid. “Two years ago, we didn’t think those markets were feasible,” he says. Delivereasy does not yet have a grocery business, but it does deliver drinks as well as restaurant orders. 

Urban sprawl in our cities makes it difficult for rapid delivery services to be profitable. (Photo: Mark Meredith/Getty)

Could the provision of services like rapid delivery encourage densification? Mohsen Mohammadzadeh, a senior lecturer in urban planning at the University of Auckland, isn’t sure. “New Zealand cities have developed to be car dependent,” he says ruefully. “Services [like rapid delivery] will only be efficient if we intensify.” During our video call, I can see one of Auckland’s interminable motorways out his office window, dots of cars tracing the acres of tarmac that allow Auckland’s urban sprawl

Rapid delivery services require significant infrastructure. It works like this: small warehouses with a limited range of stock – more like a superette than a supermarket – are strung throughout a city. When a customer places an order, a worker at the warehouse plucks the products off shelves. Then a courier working for the company piles the products into their carrier, zigzagging off through the city on their bike or scooter. The customer has to be near the warehouse, within two or three kilometres, to meet the delivery timings. 

If the system works well, 20 minutes (or whatever the app promises – internationally, timings range from 10 to 25 minutes) are enough to turn a photograph of, say, oranges tapped with urgent fingers into a bag of the thing itself on a doorstep. 

The grocery models currently operating in Aotearoa work slightly differently to this. If you order from a supermarket, you get the same range and prices as a customer who visits the store in person; you pick a delivery time to either click and collect, or have your products delivered to your house. If you are an Uber Pass member, and live in select North Island locations – mostly central urban areas – then you can order groceries through the Uber app, which will also come from a supermarket. Uber aims to deliver these products within an hour, while Delivereasy’s Foster suggests that grocery delivery in New Zealand could be  fast, but not ultrafast.

New Zealand’s low density creates a more urgent issue for companies hoping to provide rapid delivery: profitability. Even in super-dense cities with millions of people, rapid delivery companies currently lose money – as much as $150 – on every order; two US-based companies folded last week. In spread-out Aotearoa, could they even hope to compete? The venture capitalists The Spinoff contacted for this story were sceptical, but asked not to be quoted on record, just in case a brilliant enough idea came along to make it work.

The changes in infrastructure and behaviour patterns created by delivery apps also shape the social life of cities. This is linked to other trends, like the ability for many people in upper and middle-class professions being able to work from home. “Without that demand for coming to work, we’re seeing people’s behaviour changing; delivery responds to those demands,” says Mohammadzadeh. 

Grocery delivery requires dark stores, warehouses that customers cannot enter. (Photo: Dan Kitwood/Getty)

But the individual convenience of working from home changes the kinds of work available to others. App-based restaurant ordering, for instance, has created “ghost kitchens” that you can order from, but not visit. For groceries, the equivalent is “dark stores” devoid of in-person customers. This sinister vocabulary indicates how online ordering could fill urban landscapes with closed doors visited only by drivers rushing to fulfil orders. What is convenient for some people also creates kinds of work where chefs and grocery store workers can only interact with the people paying for their products via the sterile interface of an app. 

But for those who design delivery products, giving people the ability to stay at home is the point. “I think people should be allowed to get whatever they want delivered when they want it, and [have] more time to do the things they love,” says Delivereasy’s Foster. 

Supie’s Balle, too, agrees that grocery delivery is good for social relationships. “We give time back to households,” she says. “Instead of wasting time walking up the same aisles each week … consumers have more time with their families.” 

The vision that Balle and Foster present of effortless convenience may come true for those who can afford to live in inner city suburbs and work from home. But if you don’t meet these criteria, these services are simply expensive creators of traffic, making it even easier for people not to have to interact with those outside of their social class. That convenience, after all, requires workers who trudge around warehouses emptying shelves, and drivers with backpacks full of cheese and chicken, and construction workers who fix roads to make them smooth and fast. The promise of ultrafast delivery is at the expense of these workers, many of whom will likely be on low wages, and can only afford to live in outer suburbs.  

Many New Zealanders depend on cars for transport, meaning delivery services require cars, too. (Photo: Ross Land/Getty)

It’s not that services like Delivereasy and Supie are entirely to blame. “Policy makers and planners [think] about the upper middle class and we overlook disadvantaged people,” says Mohammadzadeh. People starting businesses in the digital economy inevitably replicate the mindset of people who design cities. To Mohammadzadeh, the rise in digital services and impending automation of cities will likely worsen preexisting inequities. 

Supermarkets, with their fluorescent aisles and clean produce, are already structures designed to conceal the origins of food, and the labour required to produce it. A glass screen, the products you need materialising with only the tap of your thumbs and a credit card number, exacerbates this. It’s yet another layer separating the consumer from the natural and human resources behind our globalised food system. 

Mohammadzadeh, who teaches a course on the future of smart cities, expects that eventually many of the jobs surrounding digital delivery could be replaced by autonomous vehicles and drones. For now, though, robots are expensive, and the gig economy is cheap. 

Delivery services that already exist in Aotearoa, like Delivereasy, offer a sense of what work in the economy of the future may look like. Currently, Delivereasy employ 1600 drivers across New Zealand as independent contractors, responsible for delivering drinks from liquor stores as well as food from restaurants. Drivers are paid on a commission basis, per delivery, depending on how far they have to go, and use their own vehicles – motorbikes, cars, or e-bikes.

Delivery services like Uber Eats rely on the labour of low-wage workers, who often have little job security. (Photo: Lauren DeCicca/Getty)

Foster, the Delivereasy director, says that his company prioritises good relationships with workers and restaurants. “We’re different from the typical algorithm based-management, we try to give our drivers consistent orders so they can make a decent wicket,” he says. Unlike other models such as Uber’s, drivers are managed by area coordinators with whom they communicate when they want to work, although their routes and orders are still managed through an app.

Balle says her company Supie is designed for “fairness” – which means affordable and healthy food for consumers, maintaining good relationships with suppliers and workers, and creating better environmental outcomes, by delivering fresh produce that will last longer and taking advantage of the efficiency of warehouses and groups of delivery. 

But Balle says that maintaining this fairness looks like the opposite of rapid delivery. “A rapid grocery model operates where it’s most dense and most viable. We’re the reverse of that – taking [delivery] to who are most in need on the West Coast, the north of the North Island, Gore – that’s where our priority sits.”

While Balle is convinced that delivery services can reduce the carbon emissions of food waste, the environmental effects of widespread delivery are unclear. 

Customers of supermarket delivery service Supie order groceries online. (Photo: Supie)

Delivery services can be more efficient, using one vehicle to make multiple deliveries, rather than customers all driving their emission-producing cars to a supermarket or takeaway restaurant. Some supermarkets deliver with environmentally-friendly electric trucks. Foster notes that Delivereasy often uses smaller vehicles like scooters and e-bikes to make deliveries, and where possible, bundles multiple orders to the same suburb. The company is hoping to look into carbon offset options this year. “Going forward, we’d love to get better in this space,” he says cheerfully. 

Rapid delivery services overseas often use motorcycles and e-bikes, avoiding traffic and reducing emissions. But cities in Aotearoa tend to be badly set up for modes of transport other than cars. “We need to prepare infrastructure to accommodate [delivery],” says Mohammadzadeh. If delivery is to be environmentally friendly, it will be essential to have better bike lanes, densification, and infrastructure for automated vehicles like drones to use. 

Mohammadzadeh says digital delivery points to the transformation of cities around algorithms, AI, and the internet. Without new physical and policy infrastructure, what will be delivered is more of the same: the same inequities, the same traffic, the same systems of environmental exploitation. 

With demand for delivery at a (Covid-induced) fever pitch, a stagnating supermarket sector, and the world’s richest people desperate to invest huge amounts of cash into new ideas, it seems inevitable that some people are going to throw a lot of money at trying rapid delivery. “It’s exciting,” says Delivereasy’s Foster. “We’d expect to be in the [grocery] game by the end of the year.”

Is there drama in your community Facebook group? Do you have a weird internet job? Met the love of your life in a strange way online? If you’ve got a great yarn about the internet, we want to tell your story: contact irl@thespinoff.co.nz. 

Public Interest Journalism funded through NZ On Air.

Mad Chapman, Editor
Aotearoa continues to adapt to a new reality and The Spinoff is right there, sorting fact from fiction to bring you the latest updates and biggest stories. Help us continue this coverage, and so much more, by supporting The Spinoff Members.Madeleine Chapman, EditorJoin Members

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