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Google Launches Fresh-Grocery Deliveries

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Re: Google Launches Fresh-Grocery Deliveries

#101

Post by robk »

mmgutz wrote: post #15

I'm skeptical this will be successful. I just can't see these kind of operations selecting ripe and fresh produce like my mother taught me from the grocery store. They're concerned about their bottom line and will send whatever is available. Good for the stores, not good for wise consumers.

It's really hit or miss to be honest. I was skeptical when I first started using Ocado myself. I love to thump watermelons and feel the skin of honeydews for example to pick out the nice ripe ones. Quality is inconsistent - sometimes I get great choices, sometimes poor. I've learned now to buy certain things in person only. That said, this is only maybe 2-3 things a week which I can easily do at a fruitmonger or market. Certainly the convenience of the online shopping wins for me - carrying one bag home from the fruit stall is easier than 6 bags from Tesco.

Re: Google Launches Fresh-Grocery Deliveries

#102

Post by Dwolb »

mbesto wrote: post #100
michaelt wrote: post #59

Earlier quoted context omitted.

And Google intends to compete with that using something with higher cost? The UK already has at least one mass-market grocery delivery company that is profitable (albeit barely - a pre-tax profit of £11.9m on sales of £1,202.9m). The CEO, Tim Steiner, believes in the long term they can be more efficient than bricks-and-mortar retailers by having a few large, automated warehouses fulfilling orders for the entire count…

> The UK already has at least one mass-market grocery delivery company that is profitable (albeit barely - a pre-tax profit of £11.9m on sales of £1,202.9m). I just checked Pitchbook and in 2014 Ocado has a ~3% EBITDA margin. This is hysterically low for a "technology" company.[0] For reference, Alphabet operates at ~30% EBITDA margin. The problem with food delivery profits is that they are hysterically thin and unde…

It's not that low... Amazon appears to do about 7B in EBITDA on about 100B revenue. I'd bet AWS is propping that up a bit with its really high margins.

If you compare them to another grocer (which they kind of are), their numbers seem more reasonable - the industry profit margins are typically single digits.

Re: Google Launches Fresh-Grocery Deliveries

#104

Post by Dwolb »

skewart wrote: post #34
nickpsecurity wrote: post #27

Google usually operates in high-margin industries. This is the opposite. I've had the "privilege" of working in this one. You're talking all kinds of players working against each other for perceived self-gain with individual companies constantly pushing costs down to the point their staff can barely break even. And Google intends to compete with that using something with higher cost? Pretty crazy. I was unsurprised t…

I suspect there's another reason they're doing this, and they don't actually think this will be a profitable business opportunity. Delivering groceries in 2016 is probably a strategic move in support of a larger effort that will pay off in 2019. Perhaps it's about gathering richer data on consumer preferences and behavior. Or maybe it will help them develop autonomous vehicles in some way (having already been operati…

Yup this is it. Google's bleeding money on these initiatives to preserve its crown jewel: search.

More and more people are using Amazon and other services first to find stuff they need - which means lower engagement with search and lower effectiveness of paid ads. If Google can build some of these services themselves it could potentially maintain its reputation as the first stop on the customer journey.

Re: Google Launches Fresh-Grocery Deliveries

#105

Post by hrb1979 »

Another issue that's not been mentioned is Google's concerns over ad revenue. Consumers are increasingly searching directly in Amazon versus in Google for product purchases, which is a significant worry to the Google ad revenue model. By participating more directly in the shopping experience Google can hope to stem some of these traffic losses. Doing it in groceries, which is such a regular purchase, they might believe they can change habits more quickly. And at least charging margins for convenience versus pure grocery retail, which as others have mentioned, are brutal.

Re: Google Launches Fresh-Grocery Deliveries

#106

Post by ragazzina »

feintruled wrote: post #82
roel_v wrote: post #70

Earlier quoted context omitted.

Only in Dutch, but here is the page: http://www.ah.nl/gratis-bezorgen/wk7/coca-cola?ah_campaign=i... . 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…

I know what you mean. It does feel strangely uncomfortable to the liberal mind, like having servants.

How is it different than having pizza delivered?

Re: Google Launches Fresh-Grocery Deliveries

#107

Post by feintruled »

ragazzina wrote: post #106
feintruled wrote: post #82

Earlier quoted context omitted.

I know what you mean. It does feel strangely uncomfortable to the liberal mind, like having servants.

How is it different than having pizza delivered?

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.

Re: Google Launches Fresh-Grocery Deliveries

#108

Post by puranjay »

simonbyrne wrote: post #74
michaelt wrote: post #59

Earlier quoted context omitted.

And Google intends to compete with that using something with higher cost? The UK already has at least one mass-market grocery delivery company that is profitable (albeit barely - a pre-tax profit of £11.9m on sales of £1,202.9m). The CEO, Tim Steiner, believes in the long term they can be more efficient than bricks-and-mortar retailers by having a few large, automated warehouses fulfilling orders for the entire count…

UK is a very different situation: online grocery shopping is very well established and very competitive, with most major supermarket chains offering delivery and supposedly 3 in 10 people buying their groceries online [1]. [1]: http://www.foodmanufacture.co.uk/Business-News/UK-is-biggest...

I don't know if this is a factor, but isn't parking a big problem in big UK cities? If you wanted to make a grocery store run, you'd have to fret about parking and traffic.

Most American cities don't really have this problem

Re: Google Launches Fresh-Grocery Deliveries

#109

Post by JPKab »

nickpsecurity wrote: post #27

Google usually operates in high-margin industries. This is the opposite. I've had the "privilege" of working in this one. You're talking all kinds of players working against each other for perceived self-gain with individual companies constantly pushing costs down to the point their staff can barely break even. And Google intends to compete with that using something with higher cost? Pretty crazy. I was unsurprised t…

Agreed.

Additionally, this decision by Google to jump into this game has now completely screwed a big project I was working on. How?

I work with retail data on behalf of large companies, and companies like Walmart and Target don't want any of the point of sale or inventory feeds they provide to their suppliers hosted on cloud infrastructure owned by a competitor. In the past, this meant absolutely no Amazon options for cloud infrastructure.

I was happily using Google Cloud. Now, thanks to this certainly ill-fated business decision to get into grocery delivery, I'm going to be forced to move my data to Azure.

Thanks Google. I sure wish you would try to focus for once instead of latching on to every single niche you see small startups in. I feel sorry for Instacart on this one as well. They were just starting to hit profitability in a few cities.

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