Webvan was an
onlineDot com may refer to:*.com , the generic top-level domain used on the Internet's Domain Name System*dot-com company, a company which does most of its business on the Internet...
"credit and delivery" grocery business that went bankrupt in 2001. It was headquartered in
Foster City, CaliforniaFoster City is an affluent planned city located in San Mateo County, California, 94404. As of the 2000 census, the city had a total population of 28,803...
, USA, near
Silicon ValleySilicon Valley is the southern part of the San Francisco Bay Area in Northern California, United States. The term originally referred to the region's large number of silicon chip innovators and manufacturers, but eventually came to refer to all the high-tech businesses in the area; it is now...
. It delivered products to customers' homes within a 30-minute window of their choosing. At its peak, it offered service in ten U.S. markets:
San Francisco Bay AreaThe San Francisco Bay Area, commonly known as the Bay Area, or the Yay Area, is a metropolitan region that surrounds the San Francisco and San Pablo estuaries in Northern California. The region encompasses large cities such as San Francisco, Oakland, and San Jose, along with smaller urban and...
, Dallas,
San DiegoSan Diego , named after Saint Didacus , is the second-largest city in California and the ninth largest city in the United States, located along the Pacific Ocean on the west coast of the United States. The US Census Bureau estimates the city's population at 1,279,329 as of 2008...
,
Los AngelesLos Angeles is the largest city in the state of California and the second largest in the United States. Often abbreviated as L.A. and nicknamed The City of Angels, Los Angeles has an estimated population of 3.8 million and spans over in Southern California...
, Chicago,
SeattleSeattle is located in the Pacific Northwest region of the United States. Situated in the western part of Washington State on an isthmus between Puget Sound and Lake Washington, about south of the Canada – United States border, it is named after Chief Sealth, of the Duwamish and Suquamish tribes...
,
PortlandPortland is a city located in the Northwestern United States, near the confluence of the Willamette and Columbia rivers in the state of Oregon. As of July 2008, it has an estimated population of 575,930, making it the 29th most populous in the United States. It has been referred to as the most...
,
AtlantaAtlanta is the capital and most populous city in the state of Georgia, as well as the urban core of one of the fastest-growing metropolitan areas in the United States....
,
SacramentoSacramento is the capital of the U.S. state of California, and the county seat of Sacramento County. Located along the Sacramento River and just south of the American River's confluence in California's expansive Central Valley. With a 2007 estimated population of 460,242, it is the seventh-largest...
, and
Orange CountyOrange County is a county in Southern California, United States. Its county seat is Santa Ana. As of the 2000 census, its population was 2,846,293, though a July 2008 estimate placed the population at 3,010,759, making it the second most populous county in California, behind Los Angeles County and...
. The company had originally hoped to expand to 26 cities.
In June 2008, CNET hailed Webvan as one of the greatest dotcom disasters in history.
It is now owned and operated by
amazon.comAmazon.com, Inc. is an American-based multinational electronic commerce company. Headquartered in Seattle, Washington, it is America's largest online retailer, with nearly three times the Internet sales revenue of the runner up, Staples, Inc....
.
Webvan was founded in the heyday of the dot-com boom in the late 1990s by Louis Borders, who also co-founded the
Borders bookstoreBorders Group is an international bookseller based in Ann Arbor, Michigan, United States. Borders is the second-largest bookstore chain in the United States , selling a wide variety of books, CDs, DVDs, and periodicals, as well as gifts and stationery.In 2004, Borders reached an agreement with...
in 1971.
Webvan was an
onlineDot com may refer to:*.com , the generic top-level domain used on the Internet's Domain Name System*dot-com company, a company which does most of its business on the Internet...
"credit and delivery" grocery business that went bankrupt in 2001. It was headquartered in
Foster City, CaliforniaFoster City is an affluent planned city located in San Mateo County, California, 94404. As of the 2000 census, the city had a total population of 28,803...
, USA, near
Silicon ValleySilicon Valley is the southern part of the San Francisco Bay Area in Northern California, United States. The term originally referred to the region's large number of silicon chip innovators and manufacturers, but eventually came to refer to all the high-tech businesses in the area; it is now...
. It delivered products to customers' homes within a 30-minute window of their choosing. At its peak, it offered service in ten U.S. markets:
San Francisco Bay AreaThe San Francisco Bay Area, commonly known as the Bay Area, or the Yay Area, is a metropolitan region that surrounds the San Francisco and San Pablo estuaries in Northern California. The region encompasses large cities such as San Francisco, Oakland, and San Jose, along with smaller urban and...
, Dallas,
San DiegoSan Diego , named after Saint Didacus , is the second-largest city in California and the ninth largest city in the United States, located along the Pacific Ocean on the west coast of the United States. The US Census Bureau estimates the city's population at 1,279,329 as of 2008...
,
Los AngelesLos Angeles is the largest city in the state of California and the second largest in the United States. Often abbreviated as L.A. and nicknamed The City of Angels, Los Angeles has an estimated population of 3.8 million and spans over in Southern California...
, Chicago,
SeattleSeattle is located in the Pacific Northwest region of the United States. Situated in the western part of Washington State on an isthmus between Puget Sound and Lake Washington, about south of the Canada – United States border, it is named after Chief Sealth, of the Duwamish and Suquamish tribes...
,
PortlandPortland is a city located in the Northwestern United States, near the confluence of the Willamette and Columbia rivers in the state of Oregon. As of July 2008, it has an estimated population of 575,930, making it the 29th most populous in the United States. It has been referred to as the most...
,
AtlantaAtlanta is the capital and most populous city in the state of Georgia, as well as the urban core of one of the fastest-growing metropolitan areas in the United States....
,
SacramentoSacramento is the capital of the U.S. state of California, and the county seat of Sacramento County. Located along the Sacramento River and just south of the American River's confluence in California's expansive Central Valley. With a 2007 estimated population of 460,242, it is the seventh-largest...
, and
Orange CountyOrange County is a county in Southern California, United States. Its county seat is Santa Ana. As of the 2000 census, its population was 2,846,293, though a July 2008 estimate placed the population at 3,010,759, making it the second most populous county in California, behind Los Angeles County and...
. The company had originally hoped to expand to 26 cities.
In June 2008, CNET hailed Webvan as one of the greatest dotcom disasters in history.
It is now owned and operated by
amazon.comAmazon.com, Inc. is an American-based multinational electronic commerce company. Headquartered in Seattle, Washington, it is America's largest online retailer, with nearly three times the Internet sales revenue of the runner up, Staples, Inc....
.
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 bookstoreBorders Group is an international bookseller based in Ann Arbor, Michigan, United States. Borders is the second-largest bookstore chain in the United States , selling a wide variety of books, CDs, DVDs, and periodicals, as well as gifts and stationery.In 2004, Borders reached an agreement with...
in 1971. Webvan's original investors included
Goldman SachsThe Goldman Sachs Group, Inc. is a bank holding company that engages in investment banking, securities services and investment management. Goldman Sachs was founded in 1869, and is headquartered in the Lower Manhattan area of New York City at 85 Broad Street and has its secondary office at 30...
and
Yahoo!Yahoo! Inc. is an American public corporation headquartered in Sunnyvale, California, , that provides Internet services worldwide...
, who encouraged it to rapidly build its own infrastructure (the
first-mover advantageFirst-mover advantage or FMA is the advantage gained by the initial occupant of a market segment. This advantage may stem from the fact that the first entrant can gain control of resources that followers may not be able to match...
strategy popularized by
Amazon.comAmazon.com, Inc. is an American-based multinational electronic commerce company. Headquartered in Seattle, Washington, it is America's largest online retailer, with nearly three times the Internet sales revenue of the runner up, Staples, Inc....
) to deliver groceries in a number of cities. Some
journalistA journalist is a person who practises journalism, the gathering and dissemination of information about current events, trends, issues, and people while striving for viewpoints that are not biased.Reporters are one type of journalist...
s and analysts blamed this serious error of judgment 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 ShaheenGeorge T. Shaheen , an American businessman, was chief executive at management consulting firm Andersen Consulting from 1989 to 1999, before moving on to now-defunct online grocer Webvan. His Webvan employment agreement, signed September 19, 1999 was filed with the SEC. By going to Webvan,...
who had resigned as head of Andersen Consulting (now
AccentureAccenture plc is a global management consulting, technology services and outsourcing company. It was previously incorporated in Bermuda but since 1 September 2009 has been incorporated in Ireland. It is said to be the largest consulting firm in the world. Accenture is a Fortune Global 500...
), 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 MicrosystemsSun Microsystems, Inc. is a multinational vendor of computers, computer components, computer software, and information technology services, founded on February 24, 1982...
Enterprise 4500
serversA server is an application running on a computer that delivers a service. For example, a web server will deliver web pages when requested by a browser . The way a server and a client dialogs is called a protocol...
, dozens of
CompaqCompaq Computer Corporation was an American personal computer company founded in 1982, and is now a brand name of Hewlett-Packard.The company was formed by Rod Canion, Jim Harris and Bill Murto — former Texas Instruments senior managers...
ProLiant computers and several
Cisco SystemsCisco Systems, Inc. is a multinational corporation with more than 65,000 employees and annual revenue of US$36.10 billion as of 2009. Headquartered in San Jose, California, it designs and sells networking and communications technology and services....
model 7513 and 7507 routers, as well as more than 80 21-inch
ViewSonicViewSonic Corporation is a manufacturer and provider of visual technology, specifically CRT monitors, liquid crystal displays, projectors, plasma displays, HDTV technology, and mobile products, including Mini & All in One PCs and wireless monitors....
color monitors and at least 115
Herman MillerHerman Miller, Inc., based in Zeeland, Michigan, is an American manufacturer of office furniture and equipment, as well as modern furniture for the home. It is notable as one of the first companies to produce modern furniture, and the manufacturer of the Equa chair, Aeron chair, and Eames Lounge...
Aeron chairThe Aeron chair is a product of Herman Miller designed in 1994 by Don Chadwick and Bill Stumpf. It is an ergonomic chair that is regarded by many users as inherently very comfortable due to its wide range of fit and adjustability. Its novel design has gained it a spot in the New York Museum of...
s (at over $800 each).
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 yearly $375,000
severance packageA severance package is pay and benefits an employee receives when they leave employment at a company. In addition to the employee's remaining regular pay, it may include some of the following:* An additional payment based on months of service...
for ex-CEO Shaheen.
Similar businesses
The online grocery market sector in North America has seen many other failures, including
Publix DirectPublix Super Markets, Inc. is an American supermarket chain based in Lakeland, Florida.Founded in 1930 by George W. Jenkins, it is an employee-owned, privately held corporation and was ranked No. 10 on Forbes' 2008 list of America's Largest Private Companies and is the largest in Florida...
. However, there have been a few successes. Two companies founded around the same time as Webvan that still exist today are
PeapodPeapod is an online grocery delivery service owned by Royal Ahold and operating only in a select number of US cities. The company is based in Skokie, Illinois.-History:...
started in 1989 in Chicago and
SimonDeliversSimonDelivers, Inc. was an online grocery that primarily served the Minneapolis-St. Paul metropolitan area of Minnesota, Rochester, Forest Lake, New Prague, Belle Plaine and Jordan, MN and western Wisconsin cities such as Hudson, New Richmond and River Falls...
in the
Minneapolis-St. PaulU.S. Census Bureau Areas|-! colspan="2" | |-! colspan="2" style="background:#d8d8e8;color:#000;" | Minneapolis-St. Paul-St. Cloud CSA, MN-WI
|-| Population || 3,502,891...
region of
MinnesotaMinnesota is a state in the Midwestern region of the United States. The twelfth largest state by area in the U.S., it is the twenty-first most populous, with 5.2 million residents. Minnesota was carved out of the eastern half of the Minnesota Territory and admitted to the Union as the...
and
WisconsinWisconsin is one of the fifty U.S. states. Located in the north-central United States, Wisconsin is considered part of the Midwest. It is bordered by Minnesota to the west, Iowa to the southwest, Illinois to the south, Lake Michigan to the east, Michigan to the northeast, and Lake Superior to the...
(although SimonDelivers shut down in 2008, it was acquired and re-opened as CobornsDelivers within months). The Greater Toronto Area is serviced by Toronto's original home and office delivery company Mr Case which was founded in 1984 and by
Grocery GatewayGrocery Gateway is a grocery delivery service based in Malton, Ontario and serves the entire Greater Toronto Area .Grocery Gateway was the brainchild of Toronto entrepreneur Bill Di Nardo, who along with co-founders Scott Bryan, Stephen Tallevi, Tomas Berinstein, Ben Jones, and Alan Lamb, started...
, which has partnered with and is now owned by local grocer Longo's. The New York City market is increasingly served by
FreshDirectright|thumb|Fresh Direct logo FreshDirect is an online grocer that delivers to residences and offices in the New York City metropolitan area. FreshDirect also offers next-day delivery to most of Manhattan and parts of Brooklyn, Queens, The Bronx, Staten Island, Nassau County, Westchester County,...
and
ShopRite from HomeShopRite, Shoprite, and Shop Rite are names of companies based in the United States, South Africa, Isle of Man and Australia.* ShopRite , the United States food distributor...
. Some other companies, such as
PeapodPeapod is an online grocery delivery service owned by Royal Ahold and operating only in a select number of US cities. The company is based in Skokie, Illinois.-History:...
in the
Northeastern United StatesThe Northeastern United States is a region of the United States. According to the definition used by the United States Census Bureau, the Northeast region consists of nine states: the New England states of Maine, New Hampshire, Vermont, Massachusetts, Rhode Island and Connecticut; and the...
, and
Winder FarmsWinder Farms, headquartered in West Valley City, Utah, is an online grocer providing dairy and other grocery products to the doorsteps of tens of thousands of homes in Utah and Las Vegas, Nevada.-History:The business was started in 1880 by John R. Winder...
in the
Western United StatesThe Western United States, commonly referred to as the American West or simply "the West," traditionally refers to the region comprising the westernmost states of the United States. Because the U.S. expanded westward after its founding, the meaning of the West has evolved over time...
existed before the Internet became popular, and adapted their business models to the new medium. Grocer HyVee of the midwest offers a delivery service, sometimes with online ordering, depending on the location / service area. Many cities in western Canada (including
CalgaryCalgary is the largest city in the Province of Alberta, Canada.The Calgary census metropolitan area is the third most diverse in Canada in terms of visible minorities after Toronto and Vancouver when considering only CMAs with population greater than 200,000...
and
WinnipegWinnipeg is the capital and largest city of Manitoba, Canada. It is located near the longitudinal centre of North America, in south central Canada, near the eastern edge of the Canadian Prairies, at the confluence of the Red and Assiniboine Rivers...
) are served by the delivery company Pic n Del, which partners with local supermarkets such as
Calgary CO-OPCalgary Co-operative Association Limited is a retail cooperative operating in Calgary, Alberta, Canada.-History:...
,
SobeysSobeys is the second largest food retailer in Canada, with over 1,300 supermarkets operating under a variety of banners. Headquartered in Stellarton, Nova Scotia, it operates stores in all ten provinces and accumulated sales of more than $12 billion CAD in 2006. It is part of the conglomerate...
, and
Canada SafewaySafeway Inc. , a Fortune 500 company, is North America's third largest supermarket chain, with, as of December 29, 2007, 1743 stores located throughout the western and central United States and western Canada. It also operates some stores in the Mid-Atlantic region of the Eastern Seaboard. The...
.
Amazon has also recently unveiled "
AmazonFreshAmazonFresh is a subsidiary of the Amazon.com American electronic commerce company in Seattle, Washington. It is reviving the business model of ordering groceries online for home delivery first popularized by such companies as HomeGrocer.com and Webvan in the late '90s.-History and business...
", an online grocery delivery service serving Seattle, Washington. As of January, 2009, Webvan.com is operating as "part of the Amazon.com family" (i.e. shipping non-perishable items by UPS or other standard shippers, the way Amazon.com purchases are handled), offering "more than 45,000 non-perishable grocery items."
See also
- e-commerce
- Peapod
Peapod is an online grocery delivery service owned by Royal Ahold and operating only in a select number of US cities. The company is based in Skokie, Illinois.-History:...
- Stock market bubble
A stock market bubble is a type of economic bubble taking place in stock markets when market participants drive stock prices above their value in relation to some system of stock valuation....
- Dot-com
Dot com may refer to:*.com , the generic top-level domain used on the Internet's Domain Name System*dot-com company, a company which does most of its business on the Internet...
- Irrational exuberance
External links