Americans love to stay at home. In an age when everything is simply a mouse click away, people can get almost everything they need delivered straight to their doorstep. As a result, e-commerce businesses have surged, brick-and-mortar stores have failed, and Americans are getting fatter by the day. While that last point might seem irrelevant, many Americans, who already walk less than most other nationalities, now feel that simply driving to the supermarket for groceries is too much of a chore.
In this age of instant gratification, people now expect the almighty Internet to magically deliver everything to their home, including fresh groceries via same-day delivery. This growing demand has caught the attention of three major companies – Google Inc (NASDAQ:GOOG), Amazon.com, Inc. (NASDAQ:AMZN) and Wal-Mart Stores, Inc. (NYSE:WMT) – and each of them has a unique approach to handling this new market.
In a previous article, I noted that investors should pay close attention to Google Inc (NASDAQ:GOOG)’s new project, Google Shopping Express. To create this fledgling e-commerce service, Google partnered with several major brick-and-mortar retailers, including Target Corporation (NYSE:TGT), Walgreen Company (NYSE:WAG), Staples, Inc. (NASDAQ:SPLS) and American Eagle Outfitters (NYSE:AEO), to provide an online storefront and same-day delivery for their products. Google also signed deals with local grocers to deliver fresh food.
To tie everything together, Google Inc (NASDAQ:GOOG) signed contracts with various courier services, which re-branded their delivery vans and uniforms with the Google logo, to create a unified storefront and delivery service, which uses its brick-and-mortar partners as order fulfillment centers.
Although Google only launched the service in an experimental phase in San Francisco two months ago, it has since expanded its service to the rest of the Bay Area. Google Shopping Express’ most notable advantage is that it asks participating retailers to pay for the same-day delivery surcharges, which means that products purchased via Google’s service will cost exactly the same as in the store – at very little cost to Google.
Google Inc (NASDAQ:GOOG)’s greatest strength in this venture is the support from brick-and-mortar retailers, which are itching for payback against e-commerce giant Amazon.com, Inc. (NASDAQ:AMZN). Unifying all of their e-commerce initiatives under Google’s single banner is a mutually beneficial deal that could help Google grow its e-commerce offerings and help participating retailers generate higher direct-to-consumer sales.
Amazon
Although Google’s new initiative shows promise, Amazon has been carrying on a similar experiment, AmazonFresh, over the past five years in Seattle. This service provides same-day delivery of fresh groceries from participating businesses. There are now reports, however, that Amazon.com, Inc. (NASDAQ:AMZN) is ready to expand AmazonFresh into Los Angeles and San Francisco later this year, as well as into 20 additional markets in 2014.
However, this aggressive expansion is expected to run into some problems. Will participating retailers be willing to pay same-day delivery surcharges over such as a large area? Will expenses rise to the point of offsetting gains in Amazon’s other business segments?
For now, however, Amazon.com, Inc. (NASDAQ:AMZN) has one major supporter – Shutl, a software-based service that allows multichannel (brick-and-mortar and e-commerce) retailers to offer cheaper and more efficient delivery services through partnerships with local 24/7 courier services. Shutl, which is based in the U.K., reaches 75% if the country with its courier service, and recently launched its services in New York, San Francisco and Chicago.
