Towards resilient food supply chains via the Amazon Fresh business model?
The negative adversities on the boom of eGrocery deliveries and the need for a paradigm shift.
The COVID-19 pandemic has accelerated the launch of retail innovations that intend to disrupt the food supply chain at an unprecedented rate. Leading is a new trend of so-called fast on-demand eGrocery deliveries which was already growing pre-pandemic, gained momentum during, and is now valued as a billion-dollar sector. Let me put it in the jargon of a venture capitalist:” Grocery delivery (eGrocery) is currently the hottest investment segment in the FoodTech sector.” While people wanted to avoid supermarkets and restaurants have been closed, so-called gig workers took the risk and delivered our favorite foods and snacks directly to our doorsteps. All backed up with massive amounts of venture capital funding, not the gig-workers, of course, but funders worldwide that share the same vision: the non-plus ultra-promise to deliver groceries in less than 10 minutes. On-time and perfectly designed to adapt to the needs of an efficiency-driven society, some of the start-ups have been recorded as Unicorns in no time and are scaling up exponentially, led by the success of the German company Gorillas which received $1.3B funding, $2B+ valuation. Europe is not short on these 10 min grocery delivery companies, here is a map from August 2021, it’s “HOT”.
I don’t want to elaborate here on the obscurity of this business model. If you really want to get exhausted and nauseous about the gig economy and the precarious working conditions, just follow the Gorillas worker collective Twitter account- paychecks do not arrive on time, lack of protective workwear, no FFP2 masks are provided besides legal demand in Germany, lack of social insurance, riders that were summarily dismissed after protesting for better working conditions — you name it. Or just read this Guardian article, five click-riders died in Australia — evidence enough for the author to delete all her food delivery apps. Or read here, The New York Times claims that this business model is killing small shops and restaurants (Ah, does that sound familiar to you? Correct, the Amazon business model arrived at the food supply chain, not creeping but harsh). A model that aims to create ultimate consumer convenience through three value propositions: low price, fast delivery, and a wide selection of products. And a model that has been sharply criticized for human rights abuse. But not to worry about human rights, Amazon prime is faster than the court — just replace riders with robots and let them roll through the cities delivering our groceries.
Yes ok, but, this would not happen in Sweden, right? Grocery delivery here is based on the idea of reducing food waste or we order seasonal vegetable boxes from a farm nearby, right? Well. The start-up Kavall was a bit late to the “on-demand grocery delivery” party but raised its funding in August 2021, and now delivers a diversity of groceries to people in the cities of Stockholm, Malmö, and Gothenburg. At the same time, the CEO of Foodora Sweden proudly described their goal to deliver in less than 15 min in an interview with Dagens Nyheter and put it with the words: “We are going to be like Amazon, but faster.”
So instead, I would like to ask: How did we come so far? Do we actually understand why mimicking the Amazon business model became such an achievement for actors and investors in the food supply chain? Do we understand the socio-technological regime and landscape shift that is currently taking place in the food supply chain? How do these fast deliveries hold back the transformations towards resilient and sustainable food supply chains that are so urgently needed? Do they have an impact on collective food choices? What are the economies of scale and scope? Do we still need retailers when all our food is delivered? While the rise of supermarkets since the late 17th century has been acknowledged as a disruptive innovation for the food system, we can observe similar patterns that led to a regime shift back then in the growing sector of grocery deliveries now. The predicted rise of fast grocery deliveries is more complex than just beverages and foods being delivered by gig workers to people that rather pay a delivery fee than go to the closest shop for personal reasons. The rise in food and meal deliveries is shaping our cities: dark stores and dark kitchens are popping up everywhere, the streets are overcrowded with different means of transport that will demand urban city planning to respond to this increasing delivery sector (also, we are here missing an adequate assessment of the environmental impact). Further, the health consequences of food deliveries are yet unknown and the World Health Organization recently launched a report for member countries with guidance, calling them to improve their digital food environments and monitor the impact. As they put it “The implications of this multibillion-euro sector on health, nutrition, the environment, and society are not yet well understood.”
So, how can we ensure that this growing sector is not disrupting the food supply chain in an unsustainable way? The approach in itself, delivering groceries during a pandemic in order to avoid crowding in supermarkets and secure access to fresh groceries for infected or vulnerable people, is a fantastic public health intervention. But how can this sector be nudged onto more desirable trajectories? How can we create convenience in the food supply chain that is also sustainable? The Berlin-based start-up company “alpakas” is already on a mission to prove that grocery delivery can be done sustainably- with zero-waste, organic, and local- not in 10 minutes but on the same day.
Written by Anne Charlotte Bunge, Stockholm Resilience Centre
