Google Inc. will partner with Whole Foods Market Inc. and Costco Wholesale Corp. to launch its grocery delivery service in San Francisco and another unnamed city later this year, according to Bloomberg.

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

The payoff if Google succeeds is massive: industry tracker IbisWorld predicted last winter that online groceries are a $10.9 billion industry in America, with an expected growth rate of 9.6 percent annually through 2019. Amazon debuted its San Francisco grocery delivery earlier this year.

Google Express already delivers merchandise directly to customers, including dry foods. But the new venture will hope to tackle competitor Amazon’s Fresh Direct service by delivering food straight from stores. That cuts out warehouse and refrigeration time, Elliott said.

“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 said.

Google will also expand next-day deliveries in the Midwest places like Indiana, Wisconsin and Ohio, encompassing 25 million potential customers. It already works with retailers like Kohl’s Corp. and Walgreen Co. to deliver goods in Chicago and Manhattan.

Source: San Francisco Business Journal