Google Shopping Express and the Future of On-Demand Delivery

Google-Shopping-Express-1.0-for-iOS-Teaser-001

As a bit of a late adopter, I did my grocery shopping through Google Shopping Express for the first time a couple weeks ago and I am instantly in love.

Google Shopping Express offers a seamless shopping experience where shoppers can browse a selection culled from a dozen stores, including Staples, Whole Foods, Smart & Final, and Toys ‘R’ Us.

I placed two orders, one to be delivered to Barnacle’s Mountain View office and one to our San Francisco site. Because I have a discerning palate, it turns out that the orders came from nine different stores. Whew, I thought. That sure saved me a lot of work!

Order #1: Destination Mountain View
Order #1: Destination Mountain View
Order #2: Destination SF
Order #2: Destination SF

How it Works
Google has order fulfillment reps hanging out at each of the retail stores. These reps receive orders and pack them for delivery. Couriers (outsourced to 1-800Courier in SF, Modern Express in the South Bay) come to a store, pick up packages for an area, and drive door-to-door making the deliveries.

Interestingly, my SF order had a delivery from Nob Hill Foods, all the way down south in Redwood City. The Mountain View order also had an item from Nob Hill, but it came from the store in Los Gatos instead of the store in Redwood City — even though Redwood City is closer. In fact, there’s another Nob Hill store in Mountain View about 2 minutes away from our office.

Google Couriers en route to Barnacle in SF
Google Couriers en route to Barnacle in SF
Google Couriers en route to Barnacle in Mountain View
Google Couriers en route to Barnacle in Mountain View

Customer Experience
Because my order came from nine different stores, eight separate vehicles showed up at our offices. Only eight, because my Teriyaki Yakisoba from Smart & Final was canceled from the SF order: Out of Stock in Daly City. I received that same item in my Mountain View order, because it was still in stock in San Mateo.

Not a single cracker was broken!
Not a single cracker was broken!

In SF, three drivers showed up one at a time with our chips, crackers, and ramen, over a span of 4 hours. I received an email saying my Monster Energy Drink had been delivered, but nobody had shown up with it. I sent an email inquiry.

IMG_0522

In Mountain View, I received my Teriyaki Yakisoba and Cracker Jack. Then it was noon, and I left for a couple hours to go feed homeless people. I returned to see three messages saying my almonds had been delivered, my ramen had been delivered, and an unsuccessful delivery attempt was made on my shampoo and that it would be redelivered the following day. I couldn’t find the purported almonds or ramen, so I emailed customer support.

The response:
“Hi Elaine,
I’ve connected with the courier. It looks like the Blue Diamond Toasted Coconut Almonds were left inside building 1599, around 12:02 PM.”

That’s down the street from our office. Now, I don’t fault the courier for being unable to find my address, because the building numbers are difficult to read — But is this what delivery has come to? Best effort? Is it now acceptable for the postman to drop my mail off at my neighbor’s house — “Ehh that’s close enough”? This time I had only ordered instant ramen and almonds, but what if my neighbor had received my weekly subscription of adult diapers and incontinence wipes?

These are awesome. Definitely worth the wait.
These are awesome. Definitely worth the wait.

Anyway, the ramen had seemingly vanished, but the remaining items were redelivered to Mountain View the following day. So Google Shopping Express got a 40% success rate at our Mountain View office, which is three blocks from Google’s main campus.

Our SF order did better with a 60% success rate: Only one canceled item and one missing item. It looks like mysterious disappearances are common.

I’m a fan.

The missing ramen appeared in my account a week later as a returned item. I have no idea how it found its way back to the store.
The missing ramen appeared in my account a week later as a returned item. I have no idea how it found its way back to the store.

Are They Profitable?
Ah, there’s the billion-dollar question.

Orders are transported in cute little Priuses, so the vehicle operating cost is far lower than the cost of hiring a courier. I assume that Google is optimizing for the courier’s time by designating one courier per store. Time spent consolidating orders from separate stores would be better spent driving.

Screen Shot 2014-06-04 at 5.55.24 PM

Screen Shot 2014-06-04 at 5.58.49 PM

Assumptions: Wages taken from Modern Express job listings on Craigslist. Vehicle operating costs from AAA. Stem miles is distance from store to delivery zone, estimated from Google Shopping Express maps. Driver starts and returns to store. Time and distance between stops estimated from 25-cent ramen I ordered for random strangers all over Mountain View (sorry Google).

After my 6-month free trial ends, the delivery cost is $5 per store. Would this be profitable? Even assuming that Google Shopping Express charges an additional commission to the stores themselves, the answer is…probably not. BUT, if Google replaces those expensive human couriers with self-driving cars, then the answer could be affirmative.

Environmental Sustainability
Based solely on miles traveled, it is more efficient to send multiple delivery vehicles instead of having customers make individual shopping trips. But there is still the question of whether or not I like having five separate people knock on my door to hand me one item at a time. The path from car to doorstep is the most error-prone part of this supply chain — why replicate this link with each delivery?

I suspect that Google is failing to account for redelivery attempts in their process of minimizing courier time. Google’s self-driving cars will be better at learning my address than hired couriers, so that should improve the delivery success rate.

That leaves the final piece of the story, which is a picture of all the packaging my eight items arrived in:

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4 thoughts on “Google Shopping Express and the Future of On-Demand Delivery

  1. Thanks for the economic analysis. It will be self driving cars + robots who walk to your door who do the deliveries in the future. (Of course that is why Google has been buying robotics companies over the last 6 months. You’ve heard it here first folks!!).
    Google Shopping has been great at buying bulky commodities for me, like giant cases of bottled water and 24 packs of toilet paper, and unlike Safeway, they don’t require someone to be present to sign for the delivery. I am hoping they pay the couriers enough to make it worthwhile for them to carry those up the stairs to my apartment. ;p I’d recommend putting a detailed description of how to get to your location on every order, and post larger numbers outside. Then, only once in a while the packages get left at my back door.

    1. They add stick-on plastic handles and a label to the larger items, but don’t do any further packaging. Although, I ordered a bunch of 1 gallon glass jugs of apple juice, and each was individually paper-bagged. (Did you actually just describe the bags as cute? :p )

      Maybe the couriers like having a guaranteed hourly income, versus driving for Uber?

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