Why is Google creating a same day delivery service?

Earlier this month, this blog covered news that Google was launching a same-day delivery service in New York and Los Angeles. Essentially a business will partner with Google to be part of the system. Then consumers will log on to the special site and search through stores, pick one, create an order, pay and have it delivered same day for the same price you would pay if you had made the trek to the store yourself.

Known as "Google Shopping Express," companies like Costco, Staples and Guitar center have already signed up, and from a consumer standpoint it is a great new system as it allows them access to products whenever they need it.

What we didn't cover in that article is why a search engine and tech company would want to get into the delivery business. This makes sense for an online retailer like Amazon or a grocery store like Stop and Shop's Peapod service, but where does Google fit in?

A recent article from The Motley Fool attempts to answer this question. This was done by looking at several specific topics to see if there really is a lucrative business strategy in starting a daily delivery service. These include:

Is there money here?

The fact that businesses like Amazon are looking into this kind of solution adds validity to this idea. On top of that is the fact that there are two markets for this in a big city, those that do not have cars and those that like the convenience of not needing to head all over town to run small errands.

"These companies are also betting on Americans' love of convenience," the article reads. "After all, shopping is a hassle made worse by traffic congestion, lack of time, rude store clerks, and the high price of gasoline. Why bother driving to the store when Shopping Express or MetroPost will pick your groceries up for you?"

What about cost?

Just running a delivery service is a major financial undertaking. This includes the cost of vehicles, gas, insurance driver salary and benefits. Then there are distribution centers, staff and dispatchers.

However, because this kind of solution fairly new, there are few cost rundowns available to know how best to approach this solution.

Does it need a big city?

There is a reason that these systems are being piloted in big cities. These are dense markets, with high populations and where there is a possibility to handle a lot of delivery in a small area. However, there are logistical problems when you consider trying to run a system like this in farm country like Montana.

This will probably make this a niche service that only makes financial sense in city limits.

The conclusion

"If it wants to roll out Shopping Express on a large scale, Google will have to team up with an organization with significant resources and experience in real-world logistics," the article reads. "The most likely candidates are the USPS and shipping services such as UPS or FedEx. Another potential partner is Wal-Mart, which has gigantic fulfillment centers, incredible logistics capabilities, and a vast inventory of goods for sale."

With the help of a third party logistics service, any company will be able to incorporate a delivery system that can handle same day processes successfully.