Google Express takes on Amazon in the 'on-demand' delivery battle

Google expanded its on-demand delivery service, Google Express, to more cities Tuesday, offering deliveries from merchants like Barnes & Noble, Costco, and more for a $95 annual fee. Google Express will compete with Amazon and other e-retailers to to have online goods available at the ready.

E-commerce has grown by leaps and bounds over the past decade, but it still makes up a relatively small share – just 6.4 percent –of the US retail market. For the most part, shoppers still want (or need) the items they're buying right away.  So, to move the needle, the giants of the online shopping world are clamoring to give them just that.

The latest move is from Google, which Tuesday announced an expansion of its “Google Express” on-demand shopping and delivery service.  Launched last year as a free test in San Francisco, Los Angeles, and New York, Google Express will now be available in Chicago, Boston, and Washington as well. And it’s no longer free: an annual subscription costs $95, though potential customers can sign up for a three-month trial period. $10 per month plans and $4.99 one-time usage fees are also available. 

By partnering with retail merchants, including Staples, Barnes & Noble, Costco, Target, and dozens of others depending on the city, Google Express’s goal is getting online shopping to meet needs and demands that, previously, only in-store shopping could satisfy.

“Suddenly realize that you’re designated snack mom tomorrow and don’t have time to run to the store? Or need to bring a new board game to this week’s game night but would rather avoid traffic altogether?” A Google blog post from May announcing the beta launch of the service reads. “Whether you’re in need of some pretzels or a game of Monopoly, Google Shopping Express offers convenient same-day delivery from some of your favorite local stores, delivered to your door in a matter of hours.”

The Google Express expansion is just the latest effort to have online goods available at the ready and push further into the traditional retail space – a battle among e-retailers like Google, Amazon, and eBay for what analysts call “the last mile” of the consumer market. EBay began testing a Google Express-like  service, eBay Now, in select cities a few years ago.  Amazon offers same-day shipping on certain products in some cities for  $5.99 flat fee, and it is currently testing Amazon Fresh, a $299 per year grocery delivery service, in California and Seattle. Google Express also faces competition from startups like Instacart, which offers fresh grocery delivery in a few cities for a fee and/or a $99 annual subscription. Uber, the ridesharing service, is also experimenting with product delivery with Rush, a courier service, and UberFRESH, which delivers meals.

 For now, though, Google and Amazon are focused on each other, angling to be the first stop for shoppers who need that bulk bag of pretzels or Monopoly game at a moment's notice. “Many people think our main competition is Bing or Yahoo,” Google executive chairman Eric Schmidt said during a speech in Berlin Monday. “But, really, our biggest search competitor is Amazon. People don’t think of Amazon as search, but if you are looking for something to buy, you are more often than not looking for it on Amazon.”

Google Express expanded its merchant partnerships with this week’s expansion, but Amazon still has a considerable advantage in terms of inventory. The latter is also making headway into the traditional retail market: The Wall Street Journal reported last week that Amazon is planning to open its first storefront in midtown Manhattan, just in time for the holiday shopping season. The store will reportedly offer same-day pickup of online orders and act as a showroom for the retailer’s growing fleet of electronics, like Kindle tablets.

There are no such rumblings of a Google store just yet, but the company’s investors were cheered by Tuesday’s news: shares of Google (GOOG) jumped Tuesday morning and were up 1.55 percent in early afternoon trading.