From SCDigest's On-Target E-Magazine
- Oct. 16, 2014 -
Supply Chain News: Delivery Wars Continue On, as Google Expands Its Express Delivery Service
Three New Cities Added, Amazon Prime-Like Pricing Model Unvelied
SCDigest Editorial Staff
Notice to Amazon, eBay, Instacart, UPS, FedEx, the USPS and more - here comes Google.
The search engine giant has been nibbling around the edges of efulfillment in the last couple of years, testing drones in the Australian Outback and its own, newly renamed Google Express same-day delivery offering in parts of San Francisco, Los Angeles and New York.
SCDigest Says: |
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| Why does Google want to be in the delivery business? It is a multi-layered question that in the end is tied in part to Google's concern over Amazon as a potential rival in its core search engine business. |
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This week, Google announced it was expanding that effort into three new markets and implementing an aggressive pricing model. The new areas that will be served by Google Express are Washington, D.C., Boston and Chicago.
The Google Express offering is most similar to the eBay Now service.
Different retailers, both national and more local, agree to be part of the program. Their products are made available on-line at the Google Express on-line storefront for a given market, defined by the customer's delivery zip code.
When a customer places a Google Express order, employees at one of the local retailer's stores receive notice on an Android smartphone, pick the items from a shelf, and put them into a Google-branded bag. Third-party courier services hired by Google then deliver them. The Ford Transit and Toyota Prius vehicles used to deliver orders will be wrapped in Google branding, and couriers wear Google uniforms.
eBay uses what it calls "valets" to do basically the same delivery service. Both eBay and Google get some cut of the product sale from each retailers - just how much is not known, but obviously it has to be enough to more than cover the cost of the delivery, including any charges for the delivery service itself.
Google Express was delivering products for free as part of its trial of the service. With the announcement of the expansion, there will now be delivery charges, though aggressively priced and it appears somewhat modeled on the Amazon Prime programs.
Google will charge $10 a month, or $95 a year, for unlimited same-day or overnight delivery on orders over $15. Non-members will pay $4.99 per order, or $7.99 if the order costs less than $15.
Amazon's Prime program includes unlimited two-day delivery, at a costs $99 a year (recently raised from $79). The company's Prime Fresh grocery-delivery service membership is $299 a year, and it includes unlimited same- or next-day delivery for orders of at least $35 in the markets where it is available. It's general same day service where available costs $5.99 per order for subscribers to Amazon's Prime service; non-subscribers pay $8.99 per order plus 99 cents per item.
Why does Google want to be in the delivery business? It is a multi-layered question that in the end is tied in part to Google's concern over Amazon as a potential rival in its core search engine business.
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"Many people think our main competition is Bing or Yahoo," Google Executive Chairman Eric Schmidt said earlier this week at a conference in Europe. "But, really, our biggest search competitor is Amazon."
