Google scales Express last-mile delivery, dumps perishables sales

By Daphne Howland | September 14, 2016

Dive Brief:

• Google is growing its Express delivery service, launching in MN, NE, CO, ND, SD, MS and NM in addition toexpanding its existing services in MO, KS, AR, MI, WY, IA, OK, LA, TX and OH. Google Express already operates in the San Francisco Bay Area, New York City, Los Angeles and Boston. 
• In order to expand, Google told Business Insider it’s scaling back its grocery deliveries to eliminate fresh food and perishables that need refrigeration.
• Google Express is also increasing its retailer partner ranks, although different merchants have signed on in different areas of the country. While Target is an option in many markets, for example, it’s not yet a Google Express partner in its hometown of Minneapolis.

Dive Insight:

Last-mile delivery has become a segment booming with competition and fraught with issues, especially in recent months as startups have found it difficult to scale and investors have become impatient. It’s not that there’s no way for same-day (or even speedier) delivery services to thrive. But the right business and market conditions must exist. What that means is complicated, and there may be different solutions.

Google has apparently found its answer. For them, "scaling" means focusing on same-day, one-day or even two-day delivery.

Google hasn’t described its strategy to scale its Express service in detail, but it appears to resemble Italian delivery service Milkman, which leverages a daily route manager algorithm to optimize efficiencies instead of the traditional approach of assigning drivers to static routes.

It’s not clear whether dropping delivery of perishables and giving up super-swift deliveries will hurt Google Express. But then it’s not clear how well that space is doing for Amazon, either. While Prime Now two-hour delivery is free for all Prime members in cities where the effort runs, itsAmazonFresh grocery service requires an additional $299 per year, an indication of the steep cost of such an initiative.