What Does Google Know About Same Day Delivery That Everyone Else Is Missing?

Growth in online sales may offer consumers pricing advantages in that merchants don’t carry as much overhead expense from supporting stores and staff, but they also tend not to provide the chief advantage stores offer, which is immediate availability of products purchased. To address such issues, online marketplaces led by Google, Amazon and others have rolled out same-day delivery in localized markets.

Now Google reportedly plans to expand the service nationwide, and it intends to spend as much as $500 million to do so, according to re/code. Google began testing its Shopping Express same-day deliver service last year in San Francisco and later expanding it to the wider Bay Area in September.

At the time, Google also unveiled five new partners – DODOcase, Guitar Center, L’Occitane, REI and Whole Foods Market – which added to a list of retail partners that includes Office Depot, Toys “R” Us and Walgreens. Google also revealed a new Android and iOS app to support the same-day delivery service, which delivers purchased items to buyers from the participating local retailers.

Marketing drive

Much of Google’s investment in the service expansion will focus on marketing as it enters new cities and the overhead tied to delivery vehicles, couriers and workers to pack up items and deliver them. As Google’s growing list of participating retailers suggests, the company is going after the large electronics and grocery markets and, of course, the advertising it can sell around the service.

But Google is not alone among online marketplaces in addressing consumers’ growing demand for instant (or close to it) gratification. Amazon, for example, has offered its Local Express Delivery Service since 2009, when it began offering same-day delivery of thousands of items in seven major cities, including New York, Philadelphia, Boston, Baltimore, Las Vegas, Seattle and Washington D.C.

Amazon now offers the service in 12 major U.S. cities at $5.99 per order for Prime members. Non-Prime members pay $9.98 for the first item and 99 cents for each additional item. It also supports same-day delivery of groceries through its Amazon Fresh service for purchases over $35 in Seattle, Los Angeles and San Francisco.

Amazon’s “Get It Today” and “Get It by Tomorrow” search filters are available for use on desktop browsers and on the full desktop experience on mobile devices in Dallas/Fort Worth, Indianapolis, Los Angeles, Phoenix, San Francisco and Seattle. Same-Day delivery is available seven days a week in certain areas of Chicago, Indianapolis, Los Angeles, Phoenix, San Francisco, and Seattle, and Monday through Friday in all other Same-Day eligible cities. 

Expansion plans shelved

Not all online marketplaces have found success in same-day delivery services. eBay, for example, had planned to expand its eBay Now service to 25 cities by the end of the year but has since shelved those plans. Despite the setback, however, eBay says it does not plan to discontinue the service, which launched in 2012 and uses couriers to pick up and delivery items in Chicago, the San Francisco Bay area, Dallas and most of New York City.

eBay’s decision comes as merchants also have begun offering same-day delivery services. Target, for example, last month rolled out its “rush delivery” service in the Minneapolis/St. Paul region, Miami and Boston. For a $10 fee, Target will use couriers to get items purchases by 1:30 p.m. to buyers’ homes by 9 p.m., the Star Tribune reports.

Some 30,000 items, or about one-third the contents of the average Target store, are available for rush delivery.

Retailer challenges

“I certainly think same-day delivery is part of the future; the open question is, how big?” Jason Goldberger, senior vice president of Target.com and mobile, told the publication. “My hope is that it will be very successful, and we’ll then want to expand it to more markets.”

Target’s launch comes two years after Walmart launched its “To Go” same-day delivery service in five markets, including Denver and San Francisco. The company recently discontinued the service in Minneapolis but plans to continue to offer it in the four other markets, with no future plans for expansion, according to the Star Tribune.

Making same-day services cost-effective is among the chief issues retailers need to overcome to support same-day deliveries, Goldberger said, noting that anticipating customer demand is another challenge. “Is it a handful of orders of guests per day or hundreds of orders per day?”