Online supermarket Supie opens up for small-scale wholesale orders

Up-and-coming online supermarket Supie is gearing up to take on wholesale orders as it moves to fill a gap in the $22 billion grocery sector.

Supie has been in the market since June last year and offers 6500 products. It will soon begin offering small-scale wholesale orders for retailers such as convenience stores as it moves to bring cheaper prices and better deals for consumers.

The Auckland-based supermarket, which considers itself an alternative to the big two operators making up the country's duopoly, is striving to make wholesale supply more accessible for smaller retailers and make the industry more competitive.

Supie founder Sarah Balle said the business already had 25,000 active shoppers throughout Auckland but needed to scale to be able to offer meaningful change to the sector.

Currently it matches the prices offered by major supermarkets Foodstuffs and Countdown but within two years and with enough sales volume, Supie believes it will be able to offer cheaper prices than currently offered on the market.

Supie spent three years building its supply chain and today has over 350 suppliers. It has been trialling its wholesale supply capabilities over the past five months.

"We are opening up our supply chain to be able to provide smaller retailers with access to groceries at fair prices," Balle told the Herald.

"We have a bunch of really small food producers across New Zealand and they don't have the capability to service thousands of customers to send out a box of this and a box of that to convenience stores across New Zealand.

"What that means is that because at Supie we do buy in bulk, we buy pallets of items, so through our order system we can break them down into smaller, easier sizes for convenience stores," she said.

"It will make [buying] more competitive for other retailers because we know at the moment that the majority of them are purchasing their products that they retail from the duopoly; they go in to Pak'nSave when there's a special and they will go and buy in bulk [which then takes away from the accessibility for the consumer]."

Small retailers such as dairies and convenience stores are typically buying stock from the same supermarkets at the same price as consumers, meaning that these operators have no choice but to sell at a higher price to make a margin to cover their costs, Balle said.

Supie's move to offer small-scale wholesale orders is also expected to benefit community organisations, including charities, she said.

Lower prices at the checkout

Supie holds its own stock in a 2500sq m order fulfilment centre in South Auckland.

Opening up the business to wholesale orders was not initially part of the plan for the growing supermarket player, which has been operating just over a year.

Balle told the Herald she was not aware accessing small-scale wholesale supply was an issue in the market until it was flagged in the Commerce Commission's study last year.

Sarah Balle, founder of Auckland-based online grocery business Supie. Photo / Supplied

The motivation to start Supie was centered around the desire to deliver cheaper prices and a "fairer and better alternative" within the local grocery market, she said.

"At the moment Kiwis don't have a choice where they shop each week.

"We're in a duopoly environment and we know that consumers and suppliers haven't been treated fairly for a long time and so there really is a need for a third player to enter the market," said Balle.

"What we want to be able to achieve is lower prices at the checkout for consumers, and the way we are going to do that is by having a better model across the supply chains, a more efficient model, and being innovative ... because we are online only and because we have an order system centre we don't have these huge overheads of bricks and mortar retail stores and big carpark."

Supie hopes to disrupt the grocery industry, similarly to how 2degrees did within the telecommunications sector in the early 2000s. "In terms of pricing and where we are today, the more that Kiwis support us and get behind us, the better our prices will be as we continue to grow and scale."

Supie click and collect centres

Balle said the long-term plan for Supie was to have a physical presence. Although she was unsure how far into the future that was. But she said a physical presence may not necessarily mean bricks and mortar.

Rather, the dark store model is what Supie hopes to roll out at some point.

"There are innovative ways of being able to reach consumers across New Zealand and that means click and collect options throughout. We believe the way we can achieve low prices for consumers is investing in an efficient supply chain - that is where we can get better outcomes for consumers."

Supie employs 45 staff, most based in the South Auckland fulfilment centre.

Auckland-based online grocery business Supie has opened up its business to allow for wholesale orders. Photo / Supplied

The Commerce Commission's year-long study into the grocery market found multiple failures within the industry, including anti-competitive behaviour. Commerce Minister David Clark has since announced a string of measures, including forcing supermarkets to dump the archaic practice of land covenants stopping other retailers opening rival businesses in the area.

This month the Government announced supermarkets in New Zealand would get a new watchdog to make sure they are not ripping off shoppers, with a Grocery Commissioner appointed and to be based within the Commerce Commission and review competition in the sector annually.

Clark said the commissioner would be "a referee for the sector" and would ensure "Kiwis are getting a fair deal at the checkout".

Foodstuffs and Woolworths turn over around $8 billion each every year.

Retail consultant Chris Wilkinson, managing director of First Retail Group, said the Supie model was "ambitious but exciting in the way it can give profile and help smaller and emerging brands enter the market and prosper."

He said he believed the business' growth would be supported by conscious consumers, and not necessarily price.

"Trying to foot it on price won't be successful because big players own and dominate in that space. The support for local and artisan producers (as we saw through lockdown and since), has been very strong - and we need champions to ensure that continues," Wilkinson said.