The on-demand grocery delivery space seems to be the next big thing after the on-demand taxi industry as not just budding entrepreneurs but giants like Google are eyeing a share out of this enormous market. Competing with players like Amazon Fresh & Instacart, Google (Alphabet Inc.) has recently started to deliver fresh groceries in major cities of the USA. After partnering with leading stores, Google has started same-day delivery service under the tag ‘Google Express’ which was earlier known as Google Shopping Express.
However, this does not come as a shock to many, because Google is always innovating and trying its hands in various growth sectors. In the transportation sector, along with self-drive cars, Google had started a car-sharing platform in Israel after acquiring Waze. The on-demand economy is surely a promising thing of the future but one point which needs some consideration over here is – Google’s entry into the on-demand grocery delivery sector. Although, it is a fact that this sector has very thin profit margins but Google seems to go overboard in exploring this space.
Apart from canned and non-perishable food items, Google announced that it will now be delivering fresh fruits and vegetables along with a range of other perishable grocery items that too within a matter of few hours. Although, “Google Express” – Google’s on-demand delivery service debuted in 2014, but it is after a year that it has extended its cart to fresh fruits and vegetables as a result of the huge consumer demand. According to Redcode, Google has started a grocery delivery service to select neighborhoods in San Francisco and Los Angeles. Some of the retail partners to have a tie-up with Google Grocery Delivery Service include Costco, Smart & Final, Whole Foods, and Vicente Foods.
On Demand Grocery Delivery Space:
According to a report published on CbInsights, the on-demand grocery space saw investments worth $1 Billion last year making it one of the hottest VC Investment sectors.
If we look at general trends then it is a fact that groceries are needed in every household. Online shopping and the era of the on-demand economy have made it easy for people to buy grocery items from their smartphones and get them delivered to their doorstep. Instacart was the first startup that made a big name for itself in the on-demand grocery sector. But the huge market potential has made many small and big enterprises enter this segment.
How Google is trying to take on Instacart and Amazon
Google is all set to tap into the enormous online grocery shopping market. It does not need seed or angel investors and can sustain well without any VC-backed fund. Google has offered exciting prices to consumers and even has annual plans in place to make a user a regular customer. The brand value, trust factor, and online marketing costs are surely in Google’s favor.
Google Express will deliver groceries for a minimum order value of $35 and the starting delivery fees have been kept at $2.99 per order. Membership for Google Express costs $95 per year for grocery deliveries. For non-Google Express members, orders start at $4.99, and the price ranges depending on how fast the user wants an order to be delivered.
Instacart’s fees for non-members start at $5.99 per delivery. Users can avail of annual membership of Instacart at $149 and access free two-hour and scheduled deliveries for orders above $35. On the other hand, Amazon Fresh costs users $299 per year.
Instacart has recently offered a 1-hour delivery window while Amazon’s Prime Now offers a 2-hour grocery delivery window. Google Express has also started with a two-hour window and they might reduce their delivery time in the future.
What this means for small online grocery shopping platforms?
With companies like Amazon and Google entering this market, the on-demand grocery shopping & delivery sector has become more strong. It gives everyone a strong message that this segment has huge potential in the future. If you are a small enterprise or an entrepreneur with an interest in the online grocery market, then this is the right time to launch your startup and gain some traction in your local area before scaling up to more geographies.
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