Google to deliver goods to shoppers

Internet search leader Google is taking another step beyond information retrieval into grocery delivery.

The new service, called Google Shopping Express, will initially provide same-day delivery of food and other products bought online by a small group of consumers in San Francisco and suburbs located south of the city. The company, based in Mountain View, Calif., didn’t say how many people will be part of the test.

If the pilot program goes well, Google Inc. plans to expand delivery service to other markets.

“We hope this will help users explore the benefits of a local, same-day delivery service, and help us kick the tires on the new service,” Google said in a Thursday statement.

The delivery service is part of Google’s effort to increase consumer reliance on the Internet, so it will have more opportunities to show online ads, which generate most of its revenue. Google has learned that the more time people spend online, the more likely they are to use its dominant search engine or one of its other popular services, like its YouTube video site or Gmail, that include advertising.

The delivery service also could spur merchants to buy more online ads if Google’s same-day delivery service encourages consumers to do more of their shopping online. Having to wait days or, in some cases, more than a week for the delivery of online orders ranks among the biggest drawbacks to Internet shopping.

It’s a problem that Amazon.com Inc. and eBay Inc., which operate the largest e-commerce sites, already have been trying to solve by offering same-day service in some U.S. markets. Wal-Mart Stores Inc., the world’s largest retailer, also offers same-day delivery in five markets.

A mix of national, regional and neighborhood merchants are enlisting in Google Shopping Express. The best-known names on the list include Target Inc. and Walgreen Co. All the merchants in the Google program will sell certain items through a central website. Google has hired courier services to pick up the orders at the merchant stores and then deliver them to the customer’s home or office.

Although the couriers will be working on a contract basis, they will be driving Google trucks and wearing company-issued uniforms.

It remains unclear whether Internet shopping and same-day delivery can be profitable. Online grocer Webvan collapsed in 2001, largely because it couldn’t devise a pricing plan that would pay for the costs of same-day delivery without alienating shoppers unwilling to pay too much extra for the added convenience.

Google is still trying to figure out how much to charge for its same-day delivery service. For the six-month test period in the San Francisco area, consumers won’t have to pay a surcharge. Google instead will receive a commission from participating merchants.

The expansion into same-day delivery comes at the same time that Google is preparing to close some of its older online services so it can devote more attention and money to other projects.

Google shares fell $8.47 to close at $794.19 on Thursday.