Online groceries are a difficult thing to make a success of. Ocado has built strong revenues by capturing the imagination of middle England but is still delivering profits that are peanuts when compared with its market cap. Amazon, not normally shy of a challenge, has approached food with an uncharacteristic level of caution.
That hasn’t stopped Google getting involved though. The tech giant has expanded its on-demand delivery service, Google Express, to include fresh food. You probably won’t be able to Google yourself a pork joint or a bag of spuds in Britain any time soon though. For now the service is only being trialled in small areas of San Francisco and Los Angeles, but it’s an intriguing statement of intent.
Google has been doing on-demand deliveries (including non-perishable groceries like tins) since summer 2013, but delivering fresh food is a whole different ballgame. You can’t just chuck eggs and ice cream in the back of a warm transit van and deliver them eight hours later, and the margins are much thinner than on electricals and fashion too.
Where Google’s model is different to Amazon’s and Ocado’s is that it delivers mainly from retail partners, rather than having its own big complex ‘pick and pack’ warehouse operation. Shoppers use the Google Express platform to order food from grocers like Costco and Whole Foods Market and then Google’s subcontracted drivers go and pick the food up directly from a shop. In that sense Google Express is more comparable to newish London-based start-ups like Deliveroo and Quiqup than to Ocado. Customers pay a delivery fee of $5 (£3.50) per order or $3 if they have stumped up the annual $95 membership fee.
The bosses of Britain’s supermarkets probably won’t be losing much sleep over this development just yet. For the moment it seems to be an occasional convenience for the west coast’s well-heeled than a genuine alternative to the supermarket. But as the discounters continue to ramp up their expansion and food price deflation shows no sign of stopping, more disruption is the last thing they need.