Google is shutting down two of its delivery hubs in California as a step toward restructuring Google Express, its delivery service business.
The service, which was first launched in March 2013, has struggled to set its feet in the crowded delivery service market being served by top players like Amazon and a vast number of startups trying cut their share into it, Re/code reported.
The move comes at a time when Google is trying to give its delivery business a major overhaul by reimagining its logistical operations and business model.
As a part of the overhaul, Google is reportedly planning on cutting down on labor costs by shutting the delivery hubs and outsourcing it to on-demand delivery services like Postmates and Flywheel.
Currently, Google Express is serving seven major cities including San Francisco, San Jose, Los Angeles, Manhattan, Chicago, Boston and Washington, D.C., using retail and shipping partners.
It wasn’t until the service launched in the Bay Area that Google decided to experiment with a hub model, which would receive orders from the company’s retail partners and would process them from its San Francisco and Mountain View offices for a same-day or overnight delivery, according to Re/code.
On June 30, Google reportedly notified its vendors about its plans to close the San Francisco hub.
The move might not, however, be as seamless. According to reports, Google Express employees were planning to unionize against the company.
The search engine giant’s efforts to get a tighter grip over the delivery service market brought in some C-level juggling in the management recently.
As PYMNTS reported earlier this month, the company announced Brian Elliott, the lead of the shopping unit and inventor of Google’s buy button, as the new manager of the same-day delivery service.
Elliott’s appointment came after Google Express Lead Executive Tom Fallows left the company for Uber, followed by his boss Sameer Samat who left to work with Jawbone.