Amazon, Google and Same-Day Delivery Minus Profits

NEW YORK (TheStreet) -- I have seen the Google (GOOG) Shopping Express minivans traversing my neighborhood in Santa Monica, California. In fact, they have become every bit as ubiquitous as the trucks Amazon.com (AMZN) uses to execute its Amazon Fresh delivery service here.

Aside from Fresh, Amazon -- at least in my experience -- already gets most packages to Prime members within 24 to 48 hours. This includes the once dazzling and surreal but now taken for granted not even a year later Sunday delivery.

I'm not sure how it is where you live, but down here in Southern California, Google and Amazon aren't the only games in town for rapid delivery (and, in some cases, pickup) of anything and everything. Several companies vie for the opportunity to deliver booze to your doorstep. Another fits you for a tuxedo online and delivers it to your door roughly a week later. Washio will pick your laundry and/or dry cleaning up and have it back to you within the fashionable 24 to 48. And, of course, Uber will not only pick you up, it will deliver a package via Uber Rush in Manhattan or have lunch couriered to your doorstep in Santa Monica with Uber Fresh.

The list goes on and on and on ...

Clearly these delivery companies serve a purpose and have an impact.

Purpose: I was too busy (or lazy) to walk, bike or drive to Staples (SPLS) to get the lint roller brushes I discovered I needed. So I ordered them online from Google Shopping Express.

Impact: My initial thought was to do what I often do and place the order via my Amazon Prime account. But then the light bulb went off in my head. Even though I had been seeing them for months, I finally thought consciously about those Google Shopping Express minivans, particularly my friend Kurt's experience with them. Within minutes I was logged into my Google account placing the order through Google's Staples store, taking advantage of no delivery charge for the first six months. A Google Shopping Express driver left my lint roller brushes at my door step within six hours. Add this person to the growing list of delivery folks who know the code to enter our building's front gate.

I'm sure I'll be back. And I'm probably not alone in this experience. So investors beware -- as Google Shopping Express continues to roll out (presumably) Amazon could lose some sales (until, of course, it finds a way to get items to your door faster than or as fast as Google). But what does this mean?

A revenue miss for Amazon if enough of these use Google Shopping Express instead scenarios pile up? Because we have been conditioned to believe by the financial media and cynical investors that Amazon doesn't profit on these transactions. And, of course, they're not breaking down the numbers for us so maybe it's not conditioning and cynicism; maybe it's true. But this means Google probably isn't profiting much either if at all (especially as it waives delivery fees during its launch) unless it's gouging retailers such as Staples in exchange for helping the latter's physical locations survive.

Which brings us back to purpose ... what is the purpose? For instance, why does the aforementioned dry cleaning and laundry delivery service, Santa Monica-based Washio, exist? I asked its co-founder, Jordan Metzner, that question:

Washio's number one value proposition is convenience. We bring our services to consumers home or office. Saving them time and money without having to leave their home. I don't think the concept has gone too far. Washio disrupts the current distribution method of having to visit a physical location to receive a good or service. Remember Blockbuster, then Netflix (NFLX) brought it direct to the door step and no one visited a video store ever again.

... without having to leave their home -- that's the part that sort of disturbs me. But maybe I'm odd in that I actually enjoy strolling through the neighborhood to pick up my dry cleaning after I grab a cup of coffee or juice. I started thinking about Washio (again, as I actually tested the service earlier this year) after seeing one of its small delivery vehicles wait at a stop sign as a guy carrying his dry cleaning over his shoulder traversed the crosswalk just ahead. That's the juxtaposition I'm talking about -- the why does it exist when you can just walk a block or two to ferry your dry cleaning on your own part. But Metzner makes a point. And he appears to be running a real business. 

Metzner declined to provide specifics, but he did say Washio "makes money" and considers Amazon and Google inspirations:

We know that Fresh and GSE [Google Shopping Express] are both experiments coming down from major companies who make their money in other venues. However it's quite inspiring to see how much effort they are putting into the on-demand space. I think they still have a long way to go, and it will be a very exciting ride for consumers. Of course, not all of these on-demand services will survive, but in the long run, I do believe consumers will Win.

Metzner described Washio as "bringing a premium service to consumers while still turning a profit." That, in and of itself, is interesting. Amazon and Google use their core businesses to subsidize "experiments" that, as I see it, are geared almost solely toward achieving ubiquity which creates a cycle that further drives their respective cores. However, at Washio, they're starting from the opposite end -- creating an "experiment" that generates its own revenue (and, apparently, profit) to not only subsist, but grow.

With that in mind, maybe the question shouldn't be have we gone too far with these on-demand delivery services. Instead, some services will work for some people -- particularly the smaller more premium services -- and others will seek ubiquity as a means to further long-established ecosystems. That sounds like a good premise from which to continue riffing on this particular segment of tech.

Follow @mynameisrocco

--Written by Rocco Pendola in Santa Monica, Calif.

Rocco Pendola writes for TheStreet. He lives in Santa Monica. Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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