Google Inc (NASDAQ:GOOG) To Compete With Amazon.com, Inc. (NASDAQ:AMZN) In Groceries Delivery Business
Google Inc (NASDAQ:GOOG) is seen going for Amazon.com, Inc. (NASDAQ:AMZN)’s money in the fresh food and groceries delivery business. The Web giant is planning to embark on a test of its grocery delivery service later this year and will initially launch two U.S. cities for trial. Amazon is already deep in fresh food delivery with AmazonFresh, and that is what Google wants to challenge.
For an unspecified time in the future this year, Google will start rolling out a new delivery service that will be more focused on fresh food and groceries shipping. The company already has a merchant delivery service called Google Express and the addition of fresh foods is expected to build on the existing service.
Target markets and partners
According to Google’s general manager for Express, Brian Elliott, San Francisco is one of the cities in which the trial of the fresh food delivery service will be done. Already, Google has roped in Costco Wholesale Corporation (NASDAQ:COST) and Whole Foods Market, Inc. (NASDAQ:WFM) as partners for its new delivery service.
Taking on AmazonFresh
Although Google Inc (NASDAQ:GOOG) is not openly saying it, the entry into the fresh food delivery space will see the company take on Amazon’s AmazonFresh service. A report earlier this year cited AmazonFresh as the lowest-cost fresh food delivery service in New York. AmazonFresh has been rolled out in a number of U.S. cities, besides New York City.
The other fresh food delivery service that is expected to face pressure as Google enters the scene is Instacart, a startup that is also trying to penetrate the groceries delivery industry.
A $10.9 billion industry
According to a report by IbisWorld, the U.S. online groceries industry is worth more than $10.9 billion already, but still growing. The industry is expected to expand at the rate of 9.6% yearly through 2019.
The true agenda
However, for Google Inc (NASDAQ:GOOG), interest goes far beyond directly tapping additional revenue through the groceries delivery service. The company hopes that going into the fresh food delivery will boost its Web traffic as online buying becomes the standard way for people to acquire the items they need. Google generates most of its revenue from advertising, which is why increased Web traffic makes plenty of sense for the company.
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