Alphabet Inc.’s Google is expanding its same-day delivery service to fresh groceries, the latest example of the tech titan’s increasing push into consumers’ daily lives.
Google said it would begin delivering produce, meat, eggs and other perishable goods on Wednesday in parts of San Francisco and Los Angeles. The service is part of Google Express, which partners with retailers in some U.S. cities to deliver goods to consumers within hours of an order.
Like many recent Google initiatives, including Internet-connected thermostats and high-speed Internet service, food delivery poses sometimes trickier problems than searching the Web. Fresh-food delivery in particular is a well-stocked field that has yielded few profits.
Competitors include Amazon.com Inc., Instacart Inc., Fresh Direct LLC and Safeway Inc. But they and others have struggled to make money, in part because of high delivery costs and historically low profit margins of about 2% on grocery sales. In an earlier era, when Internet service was slower and spottier, Webvan Group Inc. burned through $800 million before filing for bankruptcy in 2001 and ceasing operations.
While Amazon and Fresh Direct maintain expensive refrigerated warehouses near cities, Google says it will make deliveries directly from its existing retail partners. That will avoid the risks of owning its own inventory, like food spoilage.
In San Francisco, Google will deliver from Costco Wholesale Corp., Whole Foods Market Inc. and Smart & Final Stores Inc. In Los Angeles, it will start deliveries from Costco, Smart & Final and upscale grocer Vincente Foods.
Google said it is making some changes to its current delivery operation to accommodate fresh groceries, such as reducing customers’ delivery window to two hours from four.
It also is raising the minimum size for an order including fresh groceries to $35, from $15. For Google Express members — annual membership costs $95 — fresh-food deliveries will cost $3 an order, compared with no charge for most deliveries of non-perishable goods. Non-Express members will pay $5 an order.
Google Express has had some recent hiccups. Two top executives have left since November 2014 and the company shuttered two San Francisco-area warehouses last year, including one where workers had taken a step toward unionizing.
Google said Express has expanded in recent months, including to most of the Midwest and all of California. The company also said that eliminating warehouses has expedited the service and helped make fresh-food delivery possible.
Source: The Wall Street Journal