Google (NASDAQ: GOOGL) is starting to deliver fresh groceries through its Google Express deliveries in two U.S. cities, competing with Amazon (NASDAQ: AMZN) Fresh grocery service and supermarket-shopping startups such as Instacart Inc.
The high-tech giant said on Wednesday that the company would begin delivering perishable groceries, such as meat, eggs and fresh fruits and milk in parts of San Francisco and Los Angeles. The new service is provided by Google Express, which already offer non-perishable delivery service.
Google Express partners with some U.S. retailers to provide same-day shopping service ("shop local stores online and get items delivered on the same day). The department was founded in spring 2013 and the service is offered in California, parts of the Midwest, Boston, Chicago, Manhattan and Washington D.C.
Deliveries for perishables start at $2.99 for members and $4.99 for non-members. They arrive within a two-hour window, according to Prabhu Balasubramanian, group product manager for Google Express. Compared to the price of its rival Amazon for the same service, customers who pay $99 a year for Prime service are able to get some foods delivered within a two-hour window. Amazon also offers an expanded range to those subscribed to Amazon Fresh for $299 a year.
Online grocery delivery is becoming popular again. Competitors include Amazon.com Inc., Instacart Inc., Fresh Direct LLC and Safeway Inc. But delivering perishable groceries is more difficult than non-perishable items because of the high costs and low profit margins. It is very difficult for company to survive with a 2 percent profit margin on grocery sales. Webvan Group Inc., an online grocery delivery company, burned about $800 million before filing for bankruptcy in 2001.
Google are seeking to use their technologies to overcome these problems.