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GOOG Tests Express Delivery Service

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Google Inc. , the world's most popular Internet search engine, is moving beyond its search business. The company is testing a same-day delivery service to online customers to gain a foothold in the e-commerce world.

The new service Google Shopping Express will provide same-day delivery of food and other products bought online from participating retailers. The companies include retail giants such as Target, Staples, Office Depot Inc, Toys ‘R’Us and Walgreens and smaller outlets such as Blue Bottle Coffee and Palo Alto Toy & Sport.

The program will initially be limited to the San Francisco Bay Area but Google plans to expand the service after the local beta test. The company stated that the service will be free for now but will be charged later.

Online shopping has changed the shopping scenario. Customers visit retail shops to physically check the products but they finally purchase it online to get attractive discounts. Thus, it is important for Google to adopt innovative measures and offer the best to its online customers to compete with the likes of Amazon (AMZN - Free Report) and eBay (EBAY - Free Report) in the e-commerce market.

The need for continuous e-commerce initiatives is rising due to the growing demand for online shopping and the ever-increasing needs of Internet users. Prompt and accurate delivery of products is very important for the success of any company in the e-commerce world.

Forrester forecasts that online shoppers in the United States will spend $327 billion in 2016, up 45% from $226 billion in 2012. Further, eMarketer estimates that e-commerce sales are expected to increase 14.2% over 2012levelsto $256 billion in 2013.

The Google Shopping Express initiative is indicative of the company’s expansion into e-commerce from online search. The diversification of its business into a fast-growing segment is a positive, especially since growth in the increasingly competitive search market could turn slower than in the past.

In the fourth quarter of fiscal 2012, Google’s gross revenue (including TAC) touched a record $14.4 billion, representing sequential and year-over-year increases of 2.3% and 36.2%, respectively. Excluding the $1.5 billion contribution from Motorola, revenues were up 21.9% from the year-ago quarter.

Google has a Zacks Rank #3 (Hold). Intersil Corp. , which carries a Zacks Rank #2 (Buy), is also performing well and is therefore worth considering.

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