Delivery wars: Google follows Amazon with same-day delivery expansion
Google today announced that it has expanded its same-day shipping platform, which delivers items bought from retail partners like Costco and Walgreens, to Los Angeles and Manhattan. The service's expansion follows a similar announcement from Amazon, which will now make same-day deliveries in cities like San Francisco, Dallas, Los Angeles, Seattle, and Baltimore.
The announcements demonstrate the importance of delivery infrastructure to ecommerce efforts. These companies have been striving towards same-day deliveries for a while; now that they've figured out how to operate them in a few cities, they're ready to expand. It's not yet changing the way most people shop -- people do live outside the coasts, after all -- but the expansions let Google and Amazon experiment with services that could make a huge impact in the future.
Consider Amazon Fresh, the grocery service that could eventually allow Amazon to become a one-stop shopping destination. Expanding the service requires the creation of a new delivery infrastructure that will allow it to deliver meat and vegetables with the same ease with which it delivers books and video games. Amazon and Google have the ambitions, and these announcements are the first step forward to making those a reality.
Pando weighs in
Pando alum Hamish McKenzie wrote in 2013 that American e-commerce companies could learn from the same-day shipping prowess exhibited by their Chinese counterparts:
Same-day delivery – the Holy Grail for US ecommerce giants such as Amazon and Google – has been a reality for a while in China. Here, Meeker shows that Jindgong (formerly known as 360buy), the biggest threat to Alibaba’s Taobao, achieves that efficiency sometimes by means of bicycle. In China, ecommerce plays a more important role than it does in the US because the country’s bricks-and-mortar retail infrastructure is still under-developed, especially outside of the big cities. There’s also a lot of competition, forcing online retailers to go to greater lengths to attract customers.
One way these retailers manage to pull off such fast delivery is by employing multiple people who take care of different stages of a journey. In Shanghai, for instance, a man on a motorized scooter might hand off a package to someone who is waiting inside the turnstiles at a subway station. That person will then take the package to the appropriate stop, at which he meets another man with a scooter to whom he can pass off to the package, without having to leave the paid area of the station, for the final mile delivery. I wrote about how Amazon Prime Pantry, which allows Prime customers to buy household items in bulk, forecasts Amazon's plans for its delivery infrastructure:
But this service makes Amazon even more dependent on UPS, and it’s hard to tell how it plans to move beyond that reliance. Amazon isn’t keen on building services on top of other platforms — that’s why it built Amazon Web Services, which lets it run its website and streaming services without having to rely on another delivery network (while making the company some money, too).
The physical equivalent to building Amazon Web Services would be creating its own delivery infrastructure. It relies on as few companies as possible to deliver its bits and bytes to all of its customers; why should it continue to rely on UPS as it tries to deliver its boxes and packages? [Image by Lord Enfield]