Google Launches Fresh-Grocery Deliveries • Hacker News Board

Re: Google Launches Fresh-Grocery Deliveries

#111

Post by _asummers » Thu, Feb 18, 2016, 2:14 PM UTC

Dwolb wrote: post #104

skewart wrote: post #34

Earlier quoted context omitted.

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.

As a slight anecdotal counterpoint to your comment about Amazon, while I often buy the product eventually from Amazon, I initially search "amazon $productname" on Google because I don't like Amazon's search.

Re: Google Launches Fresh-Grocery Deliveries

#112

Post by infinite8s » Thu, Feb 18, 2016, 2:16 PM UTC

puranjay wrote: post #108

simonbyrne wrote: post #74

Earlier quoted context omitted.

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

Correction - most American suburbs don't have this problem. Grocery stores in most major American metropolises (NYC, SF, Boston, DC) can't afford the real estate for parking lots.

Re: Google Launches Fresh-Grocery Deliveries

#113

Post by skyyler » Thu, Feb 18, 2016, 2:23 PM UTC

JPKab wrote: post #109

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 f…

So Google should consult you before they take on a new product, just to make sure you're ok with it?

Re: Google Launches Fresh-Grocery Deliveries

#114

Post by mbesto » Thu, Feb 18, 2016, 2:33 PM UTC

Dwolb wrote: post #102

mbesto wrote: post #100

Earlier quoted context omitted.

> 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.

The point is that all retail is super low margin (in this case < 10%) which is made up for in volume. For Google the only incentive is to go towards a volume play because the margins will _never_ be great. The OP's point stands - this seems odd that Google would go after such a low-margin area, considering almost everything else they do has super high margins (30%+). The challenge in the US is that volume is hard to get because of last-mile economic restrictions.

Re: Google Launches Fresh-Grocery Deliveries

#115

Post by rodionos » Thu, Feb 18, 2016, 2:41 PM UTC

I still own a Webvan share certificate to remind me of stupid things I did during the last bubble. Anyway... Does Google Express have an API? I'd be great if I could a) automate my repeat orders and b) be a bit opportunistic for non-perishable promo items. That's what I do in store - I buy either Evian or San Pelegrino depending in promos.

Re: Google Launches Fresh-Grocery Deliveries

#116

Post by cnorthwood » Thu, Feb 18, 2016, 3:05 PM UTC

puranjay wrote: post #108

simonbyrne wrote: post #74

Earlier quoted context omitted.

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

Most UK supermarkets have large out-of-town retail parks for exactly this reason - although the public appetite for this is declining.

Re: Google Launches Fresh-Grocery Deliveries

#117

Post by amelius » Thu, Feb 18, 2016, 3:41 PM UTC

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…

> Google usually operates in high-margin industries. This is the opposite.

Perhaps groceries are a great way to obtain valuable customer data?

Re: Google Launches Fresh-Grocery Deliveries

#118

Post by Dwolb » Thu, Feb 18, 2016, 3:45 PM UTC

mbesto wrote: post #114

Dwolb wrote: post #102

Earlier quoted context omitted.

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.

The point is that all retail is super low margin (in this case < 10%) which is made up for in volume. For Google the only incentive is to go towards a volume play because the margins will _never_ be great. The OP's point stands - this seems odd that Google would go after such a low-margin area, considering almost everything else they do has super high margins (30%+). The challenge in the US is that volume is hard to…

Ah good point. I missed he was saying it was low from Alphabet's perspective.

Personally I believe it's a play to keep Google's search intact - as more people go straight to Amazon to find products, it could move people away from using Google first for everything (meaning fewer searches and less effective paid ads).

Re: Google Launches Fresh-Grocery Deliveries

#119

Post by tjl » Thu, Feb 18, 2016, 3:54 PM UTC

In Kitchener-Waterloo there's two different online grocery stores, Grocery Gateway (which has been operating since the '90s) and Grocera (which is very new). I've been using the former for a long time. I checked out the latter (which is backed by Google) and the markup was too high on the items I checked over Grocery Gateway. Tofu was $4.99 vs. $2.49 and soy milk was over a dollar more (I have health-related dietary restrictions). Grocery Gateway is operated by a store chain, Grocera picks them up from local stores.

Re: Google Launches Fresh-Grocery Deliveries

#120

Post by noir_lord » Thu, Feb 18, 2016, 4:03 PM UTC

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...

Used to buy mine online but I got so sick of dealing with the websites (Tesco was by far the worst, ASDA a close second) I went back to doing a weekly shop and grabbing a taxi to get home.

Now since I work in town I use the local market for all the fresh stuff (meat, fish, veg) and a variety of smaller shops for household supplies, it's actually cheaper (less waste since I mostly buy on the day of use and the market is way cheaper for most stuff than supermarkets with better quality).