WEBVAN

'Webvan' was an online "credit and delivery" grocery business that went bankrupt in 2001. It was headquartered in Foster City, California, USA, near Silicon Valley. It delivered products to customers' homes within a 30-minute window of their choosing. At its peak, it offered service in nine U.S. markets: San Francisco Bay Area, San Diego, Los Angeles, Chicago, Seattle, Portland, Atlanta, Sacramento, and Orange County. The company had originally hoped to expand to 26 cities.

Contents

History

Bankruptcy

Similar businesses

Trivia

See also

References

External links

History

Webvan was founded in the heyday of the dot-com boom in the late 1990s by Louis Borders, who also co-founded the Borders bookstore in 1971. Webvan's original investors included Goldman Sachs and Yahoo!, who encouraged it to rapidly build its own infrastructure (the first-mover advantage strategy popularized by Amazon.com) to deliver groceries in a number of cities.^[1] Some journalists and analysts blamed this serious error of judgement on the fact that none of Webvan's senior executives (or major investors) had any management experience in the supermarket industry, including its CEO George Shaheen who had resigned as head of Andersen Consulting (now Accenture), a management consulting firm, to join the venture.
Webvan tried to embrace a total customer satisfaction model involving a 30 minute window delivery without considering that many working customers would like their groceries delivered at home at night.

Bankruptcy

While Webvan was popular, the money spent on infrastructure far exceeded sales growth, and the company eventually ran out of money. For example: Webvan placed a $1 billion (USD) order with engineering company Bechtel to build its warehouses, bought a fleet of delivery trucks, purchased 30 Sun Microsystems Enterprise 4500 servers, dozens of Compaq ProLiant computers and several Cisco Systems 7513 and 7507 routers, as well as more than 80 21-inch ViewSonic color monitors and at least 115 Herman Miller Aeron chairs (at over $800 each).^[2]
As part of its shutdown process, all non-perishable food was donated to local food banks. Webvan's legacy consists of thousands of colored plastic shipping bins for groceries that are still sitting in customers' basements and closets, and a lucrative severance package for ex-CEO Shaheen.^[3]

Similar businesses

The online grocery market sector has seen many other failures, including Publix Direct. However, there have been a few successes. Two companies founded around the same time as Webvan that still exist today are Peapod started in 1989 in Chicago and SimonDelivers in the Minneapolis-St. Paul region of Minnesota and Wisconsin. The GTA-area of Toronto is serviced by Grocery Gateway, which has partnered with and is now owned by local grocer Longo's. The New York City market is increasingly served by FreshDirect. Some other companies, such as Peapod in the Northeastern United States, and Winder Farms in the Western United States existed before the Internet became popular, and adapted their business models to the new medium.

Trivia

Webvan advertised at Pacific Bell Park (now AT&T Park) in San Francisco. A sign for the company appeared behind home plate on October 5, 2001, the night Barry Bonds hit his 71st home run of the season, breaking the single-season record.
Webvan was praised on August 3, 2007 on Episode 531 of CNet's Buzz Out Loud by guest host Charles Cooper.

See also

★ e-commerce

★ Peapod

★ Stock market bubble

★ Dot-com

★ Irrational exuberance

References

1. Breakout Strategy: Meeting the Challenge of Double-digit Growth, , Sydney, Finkelstein, McGraw-Hill, ,
2. Seeking relics amid Webvan's ruins Troy Wolverton
3. Ex-Webvan CEO to collect 5,000 yearly Greg Sandoval

External links

★ CNNMoney history of Webvan

★ News.com history of Webvan