Webvan was an online "credit and delivery" grocery business that start in 1999. The Website allowed users to surf their site for food, health and beauty items, which would be delivered products to customers’ homes within 30-minutes after their choosing. At its peak, it offered service in 10 different cities in United State. Webvan grew very fast at that time so tat it had confidence to continue expand its business to other 26 cities in a short period. However, Webvan close down its business in year 2001.The cause of Webvan close down its business is they spend to much money on its infrastructure.
Webvan invested much more in automated warehouses, logistics software and a fleet of vans. They believe it would help the firm provide groceries more cheaply by to pay for more employees and expensive real estate in downtown areas. But Webvan never get enough sales to make up for its initial expenses.
Besides, the quality of delivery servive also cause their business failed. Although they tried to satisfy the customer by delivered the groceries in 30 minutes but the deliveries will sometimes be late and the customer was not at home. They are poor to connect to their customers.
In additions, Webvan also faced a number of challenges in its short existence, including a sharp economic downturn, sluggish consumer spending and investor indifference.
As a conclusion, Webvan is unable to survive because of lack of management experience. It expanded its business too quickly without figuring out how to make the business model successful in markets.
References:
Farmer, M.A., & Sandoval, Greg (2001). Webvan delivers its last word: Bankruptcy. Retrieved June 12, 2008, from http://news.cnet.com/Webvan-delivers-its-last-word-Bankruptcy/2100-1017_3-269594.html?tag=news.1(accessed 17 JAN 2009)
Ray Delgado, Chronicle Staff (2001). Webvan goes under. from http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2001/07/09/MN196371.DTL (accessed 17 JAN 2009)
Posted by TanThiam Wei
0 comments:
Post a Comment