Google announced Tuesday it would start offering a $95 annual membership for its same-day delivery service formerly known as Google Shopping Express. Now simply dubbed Google Express, the service offers delivery of goods such as clothing, books and packaged groceries from stores such as Costco, Target and Walgreens to customer doors on the same day, or day after, they are ordered.
Google Introduces a $95 Amazon Prime Competitor
Google’s also bringing the program to Boston, Chicago and Washington, D.C.
Google
Jason Del Rey has been a business journalist for 15 years and has covered Amazon, Walmart, and the e-commerce industry for the last decade. He was a senior correspondent at Vox.
Google had previously charged shoppers a $4.99 fee for each store a courier had to visit to complete an order, and nonmembers can now choose to pay $4.99 per order, not store visited.. There is also a $10 a month option. But for those who choose to pay the $95 annual membership, deliveries will be free for orders over $15.
Google’s membership is cheaper than Amazon’s $99 Prime membership, which delivers a massive array of goods to customer doors within two days, and Google’s pricing is not a coincidence. In June, Google Express product chief Tom Fallows told Re/code, “We are trying to democratize the world of same-day delivery.” (Amazon charges $299 for its Prime Fresh grocery delivery membership, but that includes the delivery of fresh produce and refrigerated items such as eggs, orange juice and yogurt, which Google Express doesn’t appear to.)
The end goal is to keep more people from fleeing Google for Amazon when they first search for a product. Each time someone searches for a product on Amazon instead of Google, the search giant loses a chance to serve up advertisements along with the search results. And advertisements, not toothpaste delivery, is still Google’s big business.
With the focus on same-day delivery instead of Amazon’s two-day window, Google is making some tradeoffs. It currently only offers same-day delivery in six major cities, plus the District of Columbia. It offers overnight delivery in a few more metro areas. Its membership also doesn’t currently include some of the extras that Amazon Prime does, such as free access to a growing library of TV shows and movies.
Still, if you talk to people who use Google’s service frequently, they rave about it. But one question pops up over and over again: How can Google possibly make the economics of this business work over the long haul? Google has declined to discuss in detail how it will make the business sustainable, though Fallows previously told me that the commission it earns on each transaction is, “the core of the business model.” He also said Google’s delivery model — which involves taking goods from a store to a consolidation facility and loading up a bunch of orders onto one vehicle — is more efficient than those that involve ferrying goods directly from a store to a customer’s home.
It also has set aside a huge pile of cash to give the project a good amount of runway: As much as $500 million, a source previously told Re/code.
Corrected: This post was updated to clarify that Google will now charge non-members $4.99 per order, not $4.99 per store visited by the delivery person.
This article originally appeared on Recode.net.
