From the article they're simply entering the "delivery" market...picking up items from retail stores and transporting them to willing buyers...obviously a markup is implied...the cost of convenience...
There's no holding of inventory...thus no storage-related overhead...
When I was in college one of the jobs I had was at a combination "feed" mill/agri-center...the boss was 85 years old and made a speech each year when he distributed Christmas bonuses....
He bought the business as a young man back in the late 30s...
He never failed to mention that people relied on what we produced in their everyday lives...he was proud of the fact that he had never laid an employee off...
He told us, "People will always want good food when they sit down at the table, and we're part of making that possible..."
A truth in the last century...a truth now...
Investing in providing one of the basics of life...hard to question the logic...
> they're simply entering the "delivery" market...picking up items from retail stores and transporting them to willing buyers
Thus gaining the ability to track a lot more about what people buy/eat, in addition to their their current tracking what people read (google-analytics), where they go (android), etc.
> the cost of convenience...
...plus the long-term cost of giving Google more details about your life.
There have been many players in this market, old and new. And when you don't have warehouses to automate and extract efficiency, you need people to do the picking. It takes me quite some time to do my own shopping, knowing my store's layout, knowing what I want in advance. I only see low, low margins.
I mean, this is the opposite of self-checkout efficiency. They're putting more people into to the cost of the product/service.
They don't do the picking, the store does for them. I'm pretty sure they're using similar methods to whatever the online ordering for in store pickup uses so it's probably not being pulled from shelves in most cases either. Google most definitely is not sending their own people into the store to pick things up.
> Yeah but groceries are a very thin margin business half percent to two percent profits.
Including groceries makes the existing, more general Google Express shopping service more valuable, and negates an advantage that Amazon's competing service, which already has grocery delivery, has over Google's service.
Analyzing the grocery delivery bit as if it were a standalone business is an error.
Grocery delivery here in the Netherlands is booming, with the big supermarkets offering their own and several smaller players working on services. When I buy from the biggest supermarket here, delivery fee depends on the moment of the day you want it delivered (between 5 and 8 in the evening is the most expensive, e7 (~$10)); cheapest moment is e3 or so. But, if you buy some products delivery is free; this week it was 8 bottles of coke or so. It's pretty much always non-perishables that get you the free delivery. I don't think we've ever paid the delivery fee, maybe once or twice.
The price of the groceries is the same as in the shop. You get the specials and all. The ordering app they have even lists the specials right at the top, it's easier to order specials online than it is in-store. Dutch are very price sensitive, there is very little margin for marking up convenience.
I don't know how they can make money on this. I suspect they bet on being able to automate order picking within say 5 years and are providing the service now as a loss leader to get people used to the idea, and work out their processes using people before spending big on automation.
At the top it says 'free delivery when buying 2 4-packs of coca cola, for deliveries on Wednesday, Thursday and Saturday. Also valid at pickup points.'
The 'pickup points' are where you can go to collect groceries yourself; you order online, it's bagged for you, you drive into a location where they put the bags into your car, you pay and you drive off. Takes less than 5 mins, many people schedule it on their way home when there is nobody at home to accept deliveries.
I love the home delivery thing - it feels very decadent though.
Yeah. I mean, we also have somebody who cleans our house, she loves working for us (her words) and we really do not have time to do it ourselves (I went looking for someone after I found myself vacuuming the kitchen floor at 11pm and thinking 'hmm should I iron my shirt after this, or get up 15 minutes earlier tomorrow to do it then...), and yet it feels somewhat 'wrong' - both from the side of having someone else do what you're 'supposed' to do yourself, and the idea that you pay someone else (much) less than what you make for it. Some with the groceries, having people deliver stuff into your kitchen using a service they cannot afford themselves. And yet I didn't feel bad buying a house from a real estate agent that was more expensive than his. It's a strange phenomenon, it must be common among people from a lower-middle class background like myself who socially have moved up into a territory that was considered 'high brow' by my 'old' environment.
Anyway, to tie this back into the grocery deliveries - I think this is a major issue for marketing people in these supermarkets working on these new offerings. Their target market must be (at least initially) working professionals with two incomes, probably with (young) children, and many (most?) of those must have similar apprehensions to what I experience(d). I tried to pry some info on that away from a marketer once when I was interviewed as part of a focus group study on something similar, but either she didn't want to let up or she genuinely didn't know what I was talking about...
If anyone knows of literature on this topic, I'd be very interested. It's not something I ever hear about, it's somewhat taboo (or at least considered bad taste) to talk about this in real life (in my experience). Which I understand, it is after all almost a 'poor me, I have so much money I have buy another wallet' style problem.
It's not, really. I guess delivery is a long standing way of receiving pizza, but not for groceries. It feels more menial, somehow. I'm not saying it's a particularly rational feeling, it just tickles some middle-class guilt impulse somewhere for me.
But the market for that convenience is noticeably smaller than the one for just affordable groceries.
And at a $10/mo subscription, that's not profitable. Hiring someone at $15/hr to pick groceries and deliver them. I don't see the math working out very well.
There's no holding of inventory...thus no storage-related overhead...
When I was in college one of the jobs I had was at a combination "feed" mill/agri-center...the boss was 85 years old and made a speech each year when he distributed Christmas bonuses....
He bought the business as a young man back in the late 30s...
He never failed to mention that people relied on what we produced in their everyday lives...he was proud of the fact that he had never laid an employee off...
He told us, "People will always want good food when they sit down at the table, and we're part of making that possible..."
A truth in the last century...a truth now...
Investing in providing one of the basics of life...hard to question the logic...