How to include dependencies in Netlify Lambda Functions?

So is it fair to say, given serverless functions A, B, C:

A needs foo, goo npm dependencies
B needs zoo
C needs foo, roo

If I use a root package.json using foo, goo, zoo, roo, it will then handle installing what I need?

But wait - that would install to my site root node_modules, not relative to my functions.

How would you handle this?