Google Expands Home Delivery Service

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Google Inc (NASDAQ:GOOG) is expanding its home delivery service Google Express (rebranded from Google Shopping Express) into Boston, Chicago and Washington DC, and while that’s still only a fraction of the country it’s a big step forward for a service that used to be confined to Manhattan, West LA, and parts of northern California. Google has also added 16 new merchant partners over the last few months, in some cases competing with those companies’ own websites.

Google Express is cheap enough that it should take off

Even though Google Inc (NASDAQ:GOOG) doesn’t sell goods directly, Google Express offers same day delivery for brick and mortar businesses including Barnes & Noble, Inc. (NYSE:BKS), Staples, Inc. (NASDAQ:SPLS), Target Corporation (NYSE:TGT), and Whole Foods Market, Inc. (NASDAQ:WFM). Consumers can either pay $4.99 per order or a flat rate of $10/month or $95 per month for any number of deliveries, although orders under $15 cost more in both cases to discourage excessive and frivolous use. Google doesn’t add any other surcharge so the price (excluding the membership fee) is that same that you would pay in-store. Just saving money on gas (or subway fares) back and forth could quickly make the price look cheap, and that’s not even including the time saved. Anyone who remembers Kozmo can tell you that cheap, quick delivery on demand is a popular service, and Google Express should take off.

Amazon should keep an eye on Google Express

But this puts struggling retail stores in a difficult position. Barnes & Noble, Inc. (NYSE:BKS), for example, is having a hard time keeping its brick-and-mortar stores open and is trying to pull more customers to its online store. Customers who place orders through Google Inc (NASDAQ:GOOG) Express are still customers, and many retailers are in no position to turn them down, but that only makes them more dependent on Google to reach customers than they already are. Since Google search is still the default way to find sites online, Google has an easy way to divert traffic from branded online stores to its own platform. If Google Express can establish itself as an essential platform, then we’ll see if the terms merchants have to accept become harsher.

The other company that needs to keep an eye on Google Inc (NASDAQ:GOOG) Express is, Inc. (NASDAQ:AMZN). Right now, the gulf between the two (in term of retail inventory and delivery coverage) is immense. But that could change, and it would be a mistake to assume that Google isn’t shooting for the moon.

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