Google to start testing delivery service for fresh food and groceries

Google Inc plans to start testing a delivery service for fresh food and groceries in two US cities later this year, increasing competition with online retailer Amazon.com Inc and startup Instacart Inc.

The trial would get underway in San Francisco and another city, according to Brian Elliott, general manager of Google Express, which already delivered merchandise, including dry foods, to customers. Whole Foods Market Inc and Costco Wholesale Corp would be among the partners of the search company for the new service, he added.

"For a lot of our merchants that have been successful with this, we're not representing the whole store today," Elliott said in an interview. "It's in our incentive, as well as the merchant's incentive, for us to help customers get the full store delivered to them."

Google's move into delivery services comes as it looks to attract more traffic to its websites. With the move, Google would take on Amazon, which rolled out its AmazonFresh service in several US cities. According to a report dated April, the e-commerce giant was the lowest-cost among rivals in New York.

Online groceries formed a $10.9-billion industry in the US, and the market is expected to grow 9.6 per cent annually through 2019, according to a report by IbisWorld in December.

Amazon yesterday said it would enter the restaurant delivery business.

The pilot-service would add to Google Express, which already delivers merchandise including dry foods, to customers. Like Instacart, Google is joining hands with the likes of Whole Foods Market and Costco to help facilitate delivery, cutting out the logistic-headaches and high costs of operating a warehouse.

According to commentators, Google is entering an already crowded field, where players included old guard FreshDirect, AmazonFresh and Instacart. Moreover, a host of other companies, including Minibar and Saucey, specialised in on-demand delivery of products, such as alcohol.

Even ride-sharing apps including Uber and Gett had looked at entering the on-demand grocery-delivery game.

According to commentators, given the size of the delivery market, $10.9 billion in the US and slated to grow 9.6 per cent annually, it made sense that everyone wanted a presence in it.