Merchant Innovation

Google’s Grocery Delivery Plans

Google is full of big news when it comes to its delivery service.

The company announced yesterday (Sept. 8) plans to expand its next-day delivery offering, Google Express, across the Midwest, as well as launching a trial of its fresh food deliveries in two U.S. cities.

In an interview with Bloomberg, Brian Elliott, general manager of Google Express, confirmed the company will begin testing a delivery service for groceries and fresh foods in San Francisco and another city later this year.

“For a lot of our merchants that have been successful with this, we’re not representing the whole store today,” Elliott said in the interview. “It’s in our incentive, as well as the merchant’s incentive, for us to help customers get the full store delivered to them.”

Elliot said the new service will include partners such as Whole Foods and Costo, with the goal of providing customers with more options in the hopes of boosting profits and sales.

“If I’ve got to pay someone to drive the product from point A to point B, the bigger the basket size, the more revenue I’ve got to offset that cost,” he added.

Google Express already delivers merchandise to customers, but adding fresh food and groceries will place the service in direct competition with Amazon and Instacart.

A report last year by IbisWorld found online groceries represent a $10.9 billion industry in the U.S., with the market expected to surge 9.6 percent each year through 2019, Bloomberg reported.

Google also has plans to reach over 25 million more people with the expansion of Google Express across six different states and the Greater Chicagoland area, Elliot said in a company blog post.

The extension of Google’s overnight delivery to the Midwest will include major retailers like Barnes & Noble, Kohl’s, PetSmart, Staples, Ulta Beauty, The Vitamin Shoppe and Walgreens, among others.

The decision to expand not only the offerings but also the reach of Google Express comes soon after Google reportedly announced plans to shut down two Express hubs in California as a step toward restructuring the delivery service business.

According to Re/code, since its launch in 2013, Google Express has struggled to solidify its foothold 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.

In an effort to boost business, Google has tried to give its delivery business a major overhaul by reimagining its logistical operations and business model, which reportedly included cutting down on labor costs by shutting the delivery hubs and outsourcing it to on-demand delivery services like Postmates and Flywheel.

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