Google Inc (NASDAQ:GOOGL) Plans to Enter the Grocery Industry- Tough Competition with Amazon.com, Inc. (NASDAQ:AMZN)

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Google Inc (NASDAQ:GOOGL), a company known for making new records and setting high standards in the world of business, is ready to start another of its venture. This time, Google will be competing in the grocery industry, and its competitor will be Amazon.com, Inc. (NASDAQ AMZN).  News has it that the company has already put away approximately $500 million for its competition against Amazon.

Sources have it that Google wants to take advantage of the opportunities that are available in the grocery industry. Keep in mind that this industry offers a whole lot of opportunities to its companies, since the total market capitalization of grocery industry is around $600 billion. Google is the largest search engine and it will not be wrong to say that the company has the largest consumer base when it comes to advertising, and now the company wants to seize revenues of about $3.5 billion from the digital advertising of brands that are related to grocery industry. However, Google is not the only firm that wants to expand its delivery services: Instacart and eBay Inc (NASDAQ:EBAY) are also looking for opportunities in this industry.

Google Shopping Express is a delivery service introduced by Google, and the company has started its delivery services in many big cities; these include San Francico, Los Angeles and New York City. According to the sources, the $500 million fund that was put away for the competition will be used to expand the market size of Google Shopping Express by introducing this service to many new cities. Moreover, Google is planning to arrange its own transportation vehicles for the delivery of products in order to cut down the transportation costs. The expansion of Google delivery service and its own fleet of transportation vehicles will make Google competitive enough to draw some of the Amazon Prime Fresh customers away from it; Amazon Prime Fresh is the delivery service provided by Amazon.com.

On the other hand, some market analysts are of the view that there is still one drawback that can throw Google out of the competition. This drawback is the fact that Amazon has its own warehouse for grocery products whereas Google will get the products from other companies first. This is where an advantage lay for Amazon and a weakness lay for Google.

As for now, Google is planning to deliver for free. However, once its market size expands and it gets a large consumer base, it will impose a subscription fee. Currently, Amazon Prime Fresh charges its customers around $299 for the whole year of delivery services. Not only do the customers get their products delivered at their doorstep but they also get access to company’s collection of music and videos.

The company, in the last trading session, opened its shares at $577.66 and closed at $571.75. The highest price was recorded to be $579.53 whereas the lowest one was reported to be $566.14. As far as company’s beta and EPS are concerned, the figures were reported to be 1.87 and $33.23 respectively. Moreover, Google Inc (NASDAQ:GOOGL) has a total market capitalization of $395.59 billion.

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