Your groceries will cost you more – lots more – through Milkrun

On a recent weekend, Chris Zhou looked at the rain falling outside his window and decided he didn't really want to go to the supermarket.

Instead, he remembered seeing an advertisement for Milk Run, the new app-driven grocery delivery service launched by supermarket chain Woolworths.

"I was a bit lazy that day," Zhou told Consumer. "I'd seen the ads everywhere, therefore I thought I'd give it a go."

So, he downloaded the Milk Run app, signed up for a free delivery special, then began loading up his basket.

That day, Zhou bought milk, butter, bread, eggs, Weet-Bix, chicken and salmon. With free delivery, his eight items cost him $86.86.

While his groceries arrived within the hour as promised, Zhou wondered how much it would have cost him to brave the rain, head to his nearest Woolworths and purchase those groceries himself.

So, he logged into Woolworths' online store and compared the prices. He found his order would have cost just $78.34, a difference of $8.52, or $10%. Because it was his first order, the $7 delivery fee was removed from his order, but if he’d had to pay it, the difference would be $14.72 – or 18%.

Does Milk Run, whose orders are packed in existing Woolworths stores using inventory already in stock, make it clear that the prices of its items are marked up?

Zhou says no. "I was not very happy with the higher Milk Run charge," he says. "I think they blend their hidden profits into the product price."

What is Milk Run up to?

Milk Run first launched in 2022, promising speedy delivery of groceries via e-scooter.

It didn’t last long, but the brand was purchased by Woolworths and relaunched across Australasia promising grocery deliveries in 60 minutes or less. First-time users are offered a free delivery discount for their first three orders, and discounts if delivery takes more than an hour. Milk Run’s website says its average delivery time is 33 minutes; on billboards placed around Auckland, it says it is 31.8 minutes.

Since mid-2023, Milk Run has offered delivery of up to 10,000 products to select suburbs in Auckland, Wellington, Christchurch, Bay of Plenty, Otago, Hawkes Bay, Taranaki, Manawatu and Waikato.

A Consumer NZ trial of the service found that the 60-minute delivery promise depended heavily on the time of day. A Friday morning snack request arrived in just 18 minutes; a peak- time order at 5pm took closer to 80 minutes and resulted in an apology and a discount coupon.

Like Chris, we also found that your groceries would cost a lot more if you purchased them through Milk Run than through a Woolworths store.

How much more will your groceries cost through Milk Run?

To find out, we loaded online baskets at Woolworths with 10 everyday grocery items: butter, milk, bread, eggs, mince, chicken nuggets, chocolate, chips, cheese and ice cream.

Then we did the same through the Milk Run app.

Purchasing those items in-store at any Woolworths supermarket would cost $73.96. Doing so online would add a $14 delivery fee, taking the total to $87.96.

Buying the same items through Milk Run would cost the most at $88.19, with a $7 delivery fee taking the total to $95.19.

Every single item was priced more through Milk Run than it was at Woolworths.

For some items, the difference was stark: a six-pack of Otaika Valley eggs would cost $5 on a special available through Woolworths, yet $6.57 through Milk Run’s own special; and a 1kg block of Mainland Colby cheese cost $13 on special at Woolworths, yet $16.96 through Milk Run’s special – a difference of nearly $4.

Half of our 10 items - the chocolate, cheese, chips, eggs and ice cream - were promoted as "specials" by both retailers, yet every single item was still more expensive at Milk Run than if it was purchased through Woolworths.

In a statement, the company blamed Milk Run’s increased costs on the price of convenience. “We have chosen to increase the prices of items rather than have additional service fees, so that customers know exactly what they are spending as they add items to their cart,” says a Woolworths spokesperson.

That spokesperson says customers “are broadly aware that Milk Run is a convenience service and the service is priced accordingly”. It also says Milk Run offers specials that aren’t available in-store.

They also claim Milk Run’s prices are about 10% more expensive than shopping instore at Woolworths. But in our comparison of 10 items, we found the difference was 19%, or 29% when the delivery fee was included.

What do the experts say?

The Commerce Commission says Milk Run isn't doing anything wrong by charging more for items that are available cheaper in-store through Woolworths.

"Businesses can set their own prices for products and services, including charging a surcharge or additional [charges]," says general manager fair trading, Vanessa Horne.

But she does say any additional charges "must be clearly disclosed before the charge is incurred".

"If a business makes a statement about the reason or basis for the charge, that reason must be accurate and not capable of misleading consumers.”

On its website, Milk Run promotes its range and specials, and states, "We add a small $7 delivery fee to ensure we can continue to provide the best, fastest possible experience to our customers."

Milk Run is promoted through Woolworths stores via discount coupons offered at check outs.

But Consumer couldn't find any admission on Woolworths’ or Milk Run’s websites that Woolworths customers could expect to pay more for their groceries if they used Milk Run to buy them.

While consumers would expect to pay a convenience fee for Milk Run’s speedy delivery, we think the size of that fee will come as a shock to many of them.

Consumer thinks Woolworths should be upfront about those additional charges, so customers can make a fully informed decision before choosing to use Milk Run.

Zhou says he's unlikely to use Milk Run again unless the company is more upfront about how it prices its products.

He'd prefer the company charged consumers a set amount for picking and packing their items, then added it on top of the delivery fee.

"That way I'd know how much I paid for my item and how much I paid for my laziness," he says.