Will Google Same-Day Delivery Catch On?

[Anonymous]

Will Google Same-Day Delivery Catch On?

By Andy Braithwaite

There was an interesting article on SeekingAlpha this week about Google’s new Shopping Express same-day delivery pilot scheme in San Francisco.

The conclusion was that this is a flawed model for Google and the retailers involved, two of whom are big-box office suppliers Staples and Office Depot, with two more of them – Target & Walgreens – also selling office supplies.

Staples provided OPI with a statement on its involvement in Google Shopping Express when we ran the story last week, and now Office Depot has followed suit:

"Our customers are always on-the-go and seemingly more time-starved, so we are always looking for new ways to provide an easy way to get the products they need when they need them. By partnering with Google Shopping Express, we are piloting a low-cost initiative that enables us to test a same-day delivery service to customers in big-city markets. Through the exposure on Google Mall, we can reach existing and new customers by extending the range of our retail stores. Our customers benefit by purchasing everything they can in store without leaving their home, office or appointment and receiving the items at a location convenient to them within a two-hour time-frame."

While it may be a low-cost option for the retailers and consumers involved (end-user ‘testers’ are getting a six-month period where they don’t pay a thing), Google has to pick up the tab in the meantime and it’s not clear how it will be able to make a profit on the scheme if and when it decides to charges customers a fee – thought to be around $70 a year should it decide to go beyond the pilot phase.

For the resellers, there appear to be a number of issues.

Firstly, they are going to be finding themselves on a central Google-run shopping portal alongside competitors, so it’s difficult to see them competing on anything except price.

It also appears that orders are being handled at store level – Staples has two stores taking part while Depot didn’t specify how many. That obviously requires up-to-the-minute information on store inventory available through the shopping portal. Staff will also have to be immediately available to pick orders ready for collection by the couriers.

Furthermore, does the reference to "extending the range" of the retail stores really hold true? The service is limited to a relatively small area and presumably consumers are not that far from an actual store. Surely Staples and Depot should be encouraging more people to physically go to the stores – think cross-selling, up-selling, spontaneous purchasing decisions, etc – rather than giving them an easy way to opt out. A big part of their retail appeal and messaging is their proximity and the ability for small business customers to nip round to a store when they’re out of ink and toner, for example.

Steve Danziger of San Francisco independent dealer AAA Business Supplies & Interiors said he hadn’t had any feedback from customers regarding same-day service options or competitive pressures.

"We only get around three requests a month for same-day delivery, using (and paying for) a messenger service," he told OPI. "Perhaps our 6pm cut-off time helps customers avoid same-day emergencies as they have until 6pm, when their life quiets, to place needed last-minute orders with us."

He also suggested that this kind of same-day service would appeal to non-office products customers once the costs of delivery have been increased. "I can see this being of much more value with well-off consumers for whom the convenience and indulgence far outweigh the delivery cost," he noted.

Diane Griffin of San Francisco-based dealer The Office City said it was too soon to tell what Google’s new service would mean, but suggested that dealers who had gone virtually stockless could be at a potential disadvantage if the idea did take off, "unless the wholesalers develop parallel capabilities for the independents".

For the time being, then, this is probably something that dealers are not going to be losing sleep over; however, it’s definitely an initiative that’s worth keeping an eye on. For Depot and Staples, it’s probably better for them that their view is from within rather than without, even if the scheme doesn’t turn out to be a success.

[Author]

April 11, 2013 at 7:09 AM