Hello everyone! Recently I was going through an article about Google Inc. planning to start a delivery service for fresh food and groceries. It will test this new service by starting it in two U.S. cities later this year. This new product line of Google will pose a threat to the online retailer Amazon.com Inc. and startup Instacart Inc. The trial U.S. cities would be San Francisco and another city. The partner’s for Google’s new service would be Whole Foods Marker Inc. and Costco Wholesale Corp. as they would be providing the fresh food and groceries to Google at good rates.[i]
Google Inc. has around 66.74% market share[ii], which shows its higher position among the competitors. Introduction of this new service by Google Inc. would be to increase the traffic to its websites as it would attract more people to the website and increase its revenue. Online groceries are a $10.9 billion industry in the U.S. and the market is expected to grow 9.6 % annually through 2019, according to a report by IbisWorld, which makes it an opportunity for Google Inc. to expand in this industry.[iii] According to the ansoff matrix this move of Google Inc. can be described as ‘Diversification’ as the company is introducing a new service which is new product and into a new market as now it has moved from consumers of the IT search engine and businesses to the consumers of households as well.
This new move is clearly competing with Amazon Fresh, which provides similar service. But this healthy competition will be beneficial for everyone as having more than one firm in the industry helps in regulating prices as none of the firms can be price makers, thus consumers will benefit. Also, similar prices would help both the firms to make profit equally and fairly without any price wars or unhealthy competition.
Google Inc. is expanding its services as it has achieved the highest market share and probably has reached the saturation point. I believe that once this point is achieved, a business must think about expansion to satisfy its customers. I believe this expansion would prove to be profitable for Google Inc., but nothing can be said beforehand.
Image Source: Google
