Alphabet Inc (GOOGL) in Race With Amazon.com (AMZN) to Get Fresh Groceries to Your Door

Amazon.com Inc (AMZN)

On Wednesday, Alphabet Inc (NASDAQ:GOOGL) announced that it will soon be delivering fresh groceries in Los Angeles and San Francisco. The decision forms part of the search giant’s expansion of Google Express, a unit of Google that already conveys dry foods and other stock to consumers. This new venture would also place Google in more direct competition with Amazon Fresh, a division of Web giant Amazon(NASDAQ:AMZN) that has long been delivering fresh foods on demand.

Amazon.com Inc (AMZN)

Google Express now gets groceries to your door

Google says it will partner with Costco, Whole Foods and a range of other entities operating in Los Angeles and San Francisco. This will help enhance the delivery of its new service. Though the news barely comes as a surprise for most. For some time now, Google has been rumored to be making a jump into the same-day delivery of fresh groceries and other perishables. The decision was only officially confirmed on Wednesday this week.

The new service is hardly one that is revolutionary either, but the demand for fresh food deliveries to homes and businesses has grown vastly in recent years. It is especially large in the two cities where Google will offer the service.

Online shopping is an $11 billion business in the U.S. It also holds a projected growth rate of 9.6 percent per year. It is a high-risk industry though, with relatively thin profit margins too. It is Web giants like Amazon.com(NASDAQ:AMZN) and Google(NASDAQ:GOOGL), which have a great influence and reach, that stand to make the most from getting into online deliveries.

Rivals feel the heat from Google

Besides Amazon Fresh, a number of other rivals will likely feel the heat of the added competition from Google Express once the service takes off. Online grocery delivery services like FreshDirect, Safeway and Instacart could feel as though their belts have been tightened due to Google’s ability to offer competitive rates for its services. Google also cuts costs by partnering with other fresh food companies instead holding stock in costly warehouses.

Non-Google Express members can make orders from $4.99 depending on the desired speed of delivery. A year membership will set you back $95 with fees staring at $2.99 per order. Orders should also be more than $35 per order for Google Express members.

For comparative purposes, an Amazon Fresh membership costs $299 per year. Instacart charges $149 annually with $5.99 per delivery for non-members and free two-hour deliveries for orders above $35. Already, Google(NASDAQ:GOOGL) Express’s $95 fees stands out as a better bargain.

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