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Bye bye Webvan.
July 9, 2001 4:12 AM   Subscribe

Bye bye Webvan. "Although Webvan would be just one of hundreds of dot-com companies to go out of business, its story is somewhat unique. Webvan was one of the most well funded of all the dot-com companies, having raised, and burned through, around $1 billion in financing."
posted by maura (56 comments total)

 
They seemed like a big winner because Webvan, as an idea, was killer. What a great concept, you know? But they just burned through too much cash, and faced the ultimate dilemma: people just enjoyed going to the store too much.

Now, I don't particularly enjoy grocery shopping, but it's far far better than ironing or doing laundry. Plus, there's the arguably human need to browse. If I go to Webvan my chances of finding something brand new to try are fairly low. If I go to Trader Joe's or Dominick's, I might walk by something really tasty and/or offensive. It's much different than just looking at photos online.

I think it was just too far ahead of its time. Five years from now, something similar to Webvan will coexist with real grocery stores. For now, we'll just have to continue shopping in the real world, as we've done for a long time and will continue to do for a long time.

How will Peapod do? Webvan was arguably the bellwether for their market segment. Those few that are still standing will be shaken. (Speaking of which, are there any alternatives to Webvan people would like to share?)

I lifted some of this from an email to a pal about Webvan, so it's not 100% original content. Viewer discretion is advised.
posted by hijinx at 7:03 AM on July 9, 2001


I think it was just too far ahead of its time.

I think it was too Jetsons; too 1950's and ignored the sensual browsing aspect of shopping for food.


Five years from now, something similar to Webvan will coexist with real grocery stores.

It's called the delivery service of your local supermarket.
posted by ParisParamus at 7:07 AM on July 9, 2001


Hmmm. Guess my order scheduled for today won't be getting here. Doh. Personally, I loved Webvan - but I loved them even more when they were Homegrocer (here in LA) - that jingle and logo of theirs was the best. Now I have to go back to standing in long lines at Ralph's every week. I'm very unhappy about this.
posted by jca at 7:10 AM on July 9, 2001


This really bums me out. I was a semi-regular Webvan customer. The main thing I liked about it, as a city dweller with no car, was ordering things I wouldn't get in a grocery store that I'd have to carry home. Like cases of soda, multiple gallons of Gatorade, and heck even big bottles of laundry detergent are a pain to carry. So every month or so I'd get a big Webvan order of that stuff, and be set for a while.

I really don't understand why someone can't make a business like this, or Kozmo, work. Maybe Peapod will survive? I'm gonna have to look into them...
posted by dnash at 7:14 AM on July 9, 2001


peapod was established and in operation for a lot longer than webvan, operating even when the only time you could send in your grocery list was via fax or possibly AOL versus just anyone on the internet being able to do something. plus my brother invested in peapod, so this isn't all bad. :)
posted by moz at 7:20 AM on July 9, 2001


dnash: My feelings exactly. I was a long-time Peapod customer who became a hardcore Webvan convert. Peapod does a nice job, but I liked Webvan better overall because of shorter delivery windows (1/2 hour as opposed to 3.5 hours) and they used those big plastic crates instead of zillions of plastic bags. Guess I'm going back to Peapod.
posted by smich at 7:24 AM on July 9, 2001


smich: ...shorter delivery windows...

At least in Chicago, that window was switched to an hour. I saw this as unacceptably long, although I might have just gotten used to those 30-minute windows.
posted by hijinx at 7:26 AM on July 9, 2001


there are just way too many people on metafilter who live in chicago
posted by moz at 7:30 AM on July 9, 2001


Definitely ahead of its time. I don't need to smell my cereal and orange juice, ParisParamus ;)

Supplemented with fresh food from Pike Place, Webvan was a godsend.
posted by jragon at 7:33 AM on July 9, 2001


> They seemed like a big winner because Webvan, as an
> idea, was killer. What a great concept, you know?

Only if there's somebody at home all the time to receive the delivery. How many households these days have a full-time housewife or househusband? Zero, among the people I know. Everybody has to work.

If there isn't normally somebody at home to receive the delivery then you've got to make arrangements to be there when it comes, just as if it were the plumber or the electrician. Or, alternatively, never order anything that has to go into the refrigerator immediately, like milk or ice cream, or anything else frozen, or chicken that will spoil in the summer heat, or vegetables that will wilt while they wait for you to get home.

For my household, we're already down to stuff like dry dog food and laundry soap as potential webvan orders. And since I've got to go to the store anyway to get all the perishables, why not just get everything at the same time and phooey on Webvan? Personally I hate being chained to the house for a mere 30 minutes just waiting for pizza.

Evening delivery wouldn't make any difference for me because I don't spend four hours glued to the tube. Until they can teleport stuff directly into my fridge I don't see the application of the concept.

P.S. I want to look at those tomatoes before I buy 'em.
posted by jfuller at 7:35 AM on July 9, 2001


Guess I'm going to be eating a lot more pizza.

As a regular Webvan customer, I'm going to be looking frantically for a replacement.
posted by frykitty at 7:45 AM on July 9, 2001


pizza is good for you, anyway. it's got all the 4 food groups. if you get pepperoni or sausage or something like that, anyway.
posted by moz at 7:53 AM on July 9, 2001


Only if there's somebody at home all the time to receive the delivery. How many households these days have a full-time housewife or househusband? Zero, among the people I know. Everybody has to work.

I think you're misunderstanding how this worked. You weren't sitting around at home, hoping WebVan would show up - like the plumber or something. You specified a thirty minute window and they (at least, in my experience) delivered your stuff when you wanted it. I used to order from the office in the morning and tell them to come by after dinner that night. Worked like a charm. Being in Chicago, fortunately (sorry, moz!) I can switch to Peapod.
posted by m.polo at 8:13 AM on July 9, 2001


What I don't get is why a major chain like Safeway or Von's hasn't jumped on this. Most of them already offer delivery anyway, so why couldn't they set up an online store?
posted by frykitty at 8:26 AM on July 9, 2001


m.polo: I can switch to Peapod.

Have you tried Peapod? Has anyone here tried it? How does it compare to Webvan? Why is the sky blue? What makes it rain? Who put the bop in the bop she bop she bop?

frykitty: (hi!) What I don't get is why a major chain like Safeway or Von's hasn't jumped on this.

Perhaps they were all waiting to see how Webvan fared. I know that Peapod, at least in this area, used to be just a delivery service for Jewel (Albertson's)... and that's why I initially disliked it. I had a Jewel nearby and, at the time, that wasn't a need for me. Now, Peapod has its own distribution centers if memory serves, so it's an entirely different beast.
posted by hijinx at 8:30 AM on July 9, 2001


> I used to order from the office in the morning and tell
> them to come by after dinner that night. Worked like a
> charm.

So there were long stretches of the day when relatively few people wanted anything delivered and then a shorter interval -- after work, before bedtime -- when lots of people wanted their stuff delivered? So Webvan had to have enough vans to service this daily delivery rush, and the rest of the time the vans pretty much sit around? Wonder if this had anything to do with Webvan's being unable to control their costs.

I noticed smich said Peapod's delivery window is ~3.5 hours. That would spread out the big delivery rush, all right, but then my objection to being stuck at home until the van showed up becomes relevant again.
posted by jfuller at 8:30 AM on July 9, 2001


Definitely ahead of its time. I don't need to smell my cereal and orange juice, ParisParamus ;)

In all seriousness, while you don't need to examine your SpecialK or Cambells Soup, there is enough that you do want to examine and discover that requires going to the store. So the tomatoes exert leverage on your orange juice, as does your need to go shopping for other things, and what you're left with is a service which will not replace going to the Stop 'n Shop often enough for enough people to make money. The people who invested in Peapod and Webvan did so on the premise that it would and have/will lost/lose. The rise of small "gourmet" stores and chains only underlines their miscalculation (quality prevailing over price/convenience).

And so, you'll have to wait for "Computer. Earl Grey, Hot."
posted by ParisParamus at 8:35 AM on July 9, 2001


Two curious elements:

Webvan's site is back, saying they're temporarily unavailable instead of just saying goodbye (though this may change.)

Peapod actually touts the inability to buy impulsively as a feature!
posted by hijinx at 8:39 AM on July 9, 2001


I never thought webvan or peapod would work. There is very little profit margin in groceries. Most stores get anywhere from 4-8% margin, usually averaging 50 cents of profit/bag sold. Besides, IMHO, only people in large urban areas are the ones interested in delivery services of more than just pizza and chinese food.
posted by internal at 8:41 AM on July 9, 2001


Back on June 1st, "Migh-tay Migh-Tay" Maggeh (found via J-Ko) posted the following:

"I'm in love with Webvan. I know people throw the L-word around pretty lightly these days, so let me clarify: If Webvan had a penis, I would propose. Webvan brings me flowers, wine, and quality ice cream in little round "this is quality ice cream" containers. Webvan never comes home with a can of smoked oysters and some salsa when I gave Webvan a list of the fresh produce I wanted. Webvan comforts me with ready-made meals after a hard day at work. As soon as Webvan can have sex with me, it's a go.
Unfortunately, no matter what Dionysian wonders modern technology has in store, that day will never come. You see, Webvan is dying, and I think I know why:

A Brief Conversation With the Unenlightened Webvan Delivery Guy:

DG: Yeah, I work on the weekends, so Tuesday and Wednesday is my weekend.
Me: Hm. That's kind of cool. You can do all of your errands without worrying about crowds or stuff closing early.
DG: Actually, you'd be surprised. The grocery store is always packed. "


I don't which is more interesting...that she would marry Webvan (much like Lisa said "Yes" to marrying a carrot to the delight of her classmates?), or that she...(dramatic pause)...foretold the future?!
posted by davidmsc at 8:48 AM on July 9, 2001


I'm going to miss Webvan so much.

I had a delivery scheduled for this afternoon...

I'm also moving to Chicago at the end of next month, how is Peapod? How is living in Chicago? I'm in Seattle right now...
posted by TiggleTaggleTiger at 8:50 AM on July 9, 2001


What I don't get is why a major chain like Safeway or Von's hasn't jumped on this.

In the UK, Tesco, the largest of the supermarket chains did this pretty early on. As a result, there was never a UK version of anything like WebVan, and as I understand it, the Tesco online operation is pretty successful. I was certainly pretty thankful for it when I broke my collarbone, but never used it otherwise - I enjoy browsing too much like many others here. I suspect online grocery operations will only survive as adjuncts of "real" shops, where the cost of the infrastructure can be shared.
posted by pascal at 9:05 AM on July 9, 2001


sshhhh! don't tell judith.
posted by heather at 9:07 AM on July 9, 2001


ha! it is challenging to deal with groceries when you live on top of a large hill...alas.
posted by judith at 9:24 AM on July 9, 2001


There is very little profit margin in groceries. Most stores get anywhere from 4-8% margin

I thought the average grocery store profit margin was more in the range of 1-2% (read down a bit - industry avg. is 1.4%).

Nonetheless, the idea was to charge extra for deliveries, not to fund the delivery service out of the existing anemic profit margins.

No Webvan in Vienna, though. I walk half a block to the corner grocery once a week. Not too bad, except it's a real pain to lug a week's worth of groceries up 4 flights of stairs to my apartment.
posted by syzygy at 9:35 AM on July 9, 2001


Ah...half a block to get groceries. Nice. I unfortunately chose to move into a downtown neighborhood that has only recently become residential. The only local service is a pet store.
posted by frykitty at 9:42 AM on July 9, 2001


In all seriousness, while you don't need to examine your SpecialK or Cambells Soup, there is enough that you do want to examine and discover that requires going to the store.

But, see, that's just not true. I used Pike Place for produce, but that doesn't mean I didn't buy huge $100 orders frequently. I probably singlehandedly helped Webvan stay open for an extra week ;)

No, Webvan didn't meet all of my needs, but neither does a normal grocery store.
posted by jragon at 9:43 AM on July 9, 2001


Peapod had been on the brink of extinction, too, about a year ago -- no funding in sight, high-profile CEO bailed, etc. Luckily for them, they were bought outright by the megacorp that owns many supermarket chains like Boston's Stop & Shop to be run directly as the delivery arm of those stores. Grocery delivery is a subset of the grocery business, not a sustainable business in itself.
posted by briank at 9:50 AM on July 9, 2001


Hey Peapod people....you can get $40 in groceries if you refer someone to Peapod and they become a customer.

The first person to IM me gets to be my referal.
posted by jennak at 9:53 AM on July 9, 2001


But, see, that's just not true. I used Pike Place for produce, but that doesn't mean I didn't buy huge $100 orders frequently. I probably singlehandedly helped Webvan stay open for an extra week ;)

Look. Bless you for fighting (ordering?) the good fight (order?). My only aim in this discussion is to tease out good but unrealistic business models from ones which might get the Web moving forward again as a viable commerical medium. The feeling on the street right now is one of near total pessimism, so the faster the unviable, Gold Rush businesses fail, the better.
posted by ParisParamus at 9:56 AM on July 9, 2001


Sucks for those of you who had the opportunity to use it; sucks for those of us who invested in the stock. :(
posted by rushmc at 9:59 AM on July 9, 2001


The official notice is up.

Glad I got a delivery on Saturday.
posted by frykitty at 10:00 AM on July 9, 2001


Oh darn. Lazy Americans now have to take the SUV (or, *gasp*, walk or RIDE a bike!) down to Stop and Shop to get their Cheese Doodles and Mountain Dew.

I swear they're just trying to fatten us all up for the kill.
posted by bondcliff at 10:05 AM on July 9, 2001


All this talk about low profit margins and the viability of home grocery delivery are missing the point. The REAL reason that Webvan failed as a company is that someone approved putting a logo with NEON GREEN in it on a BEIGE van. Yuck. I can't think of a more unappetizing combination.
posted by robbie01 at 10:15 AM on July 9, 2001


lazy? aren't we doing our bit by staying off the roads? one truck for many, and you should see judith's hill. i won't even drive down it.
posted by heather at 10:17 AM on July 9, 2001


Just for that Jim, you're picking me up on Saturday to go shopping. Be here at 9am sharp.
posted by frykitty at 10:18 AM on July 9, 2001


The funny thing is, this ad keeps popping up on Yahoo...
posted by owillis at 10:20 AM on July 9, 2001


Ok, I'm sorry. That was uncalled for. I pay for certain conveniences too. I go to Valvoline to get my oil changed because it's not worth it for me to do myself. I've used Amazon.com when I *know* what book I need and don't mind waiting a few days.

But, for me anyway, food is sacred. I *enjoy* looking for the best tomato in the bunch. I *like* rummaging through the cheese bin to find the perfect sized block of Asiago. I don't want anyone else picking out my steaks for me. As busy as life is I don't mind going to the grocery store sometimes. I realize that's not the case for everybody though. To each his own.

I just think that, out of all businesses that sell conveniences, food delivery (groceries, not pizza or Chinese Food) seems like the one we need the least.

Or, maybe I'm just a food snob. I dunno.
posted by bondcliff at 10:27 AM on July 9, 2001


I swear they're just trying to fatten us all up for the kill.

"The Earth is a farm. We are someone else’s property." -- Charles Fort
posted by webmutant at 10:29 AM on July 9, 2001


Oh darn. Lazy Americans now have to take the SUV (or, *gasp*, walk or RIDE a bike!) down to Stop and Shop to get their Cheese Doodles and Mountain Dew.

I don't think most webvan users were getting such items. I used homegrocer/webvan a few times. As someone else pointed out in this thread, it's really handy to have loads of liquid delivered to you if you don't have a car or don't know people who have a car. I could order a few cases of Rice Dream (which was cheaper per unit than the nearby grocery stores), big OJ, big apple juice, etc. I suppose if I had a rear cart that I could attach to a bike I could do it that way. HG/WV also had some items that I couldn't get at nearby places.

I think another reason I used it was that I got a discount via work so I could get any size order without getting a delivery charge.

Have any seattle people here used albertson's?
posted by gluechunk at 10:43 AM on July 9, 2001


I just think that, out of all businesses that sell conveniences, food delivery (groceries, not pizza or Chinese Food) seems like the one we need the least

There are also several (small) places around here that will deliver a bucket of organic stuff to you each week. You don't know what fruits and veggies you'll get, they just leave a box on your porch of fresh stuff. Something like $30/week? Assuming you make use of all the stuff, I think that may be a convenience worth paying for.

When seattle webvan was still homegrocer, they had fruits/vegs./meat that was fresher than nearby large grocery stores - people liked that. But to save money, webvan changed stuff and the quality went down.
posted by gluechunk at 10:50 AM on July 9, 2001


I swear they're just trying to fatten us all up for the kill.

Soylent green... is... people!
posted by owillis at 10:59 AM on July 9, 2001


Now if someone would deliver some Soylent Green to me, I'd be all for it!
posted by bondcliff at 11:01 AM on July 9, 2001


gluechunk: I've used Albertson's.

I don't like the interface on the site as much as I liked Webvan but the service is good, produce fresh, &c...
posted by TiggleTaggleTiger at 11:06 AM on July 9, 2001


I found this February New York Times article a really interesting assessment of Webvan's mistakes.

The main problem seems to have been a crucial miscalculation of how quickly the market for these services would grow. Webvan spent a huge amount of money developing an infrastructure that required a high volume of business just to stay operational.

Also, this:

<quote>
To some of HomeGrocer's backers, its sale was a frustrating turn of events because its model -- which relied on cheaper, less automated warehouses -- appears to be more in line with the realities of the market.

"We were bigger, doing better in the marketplace and were a lot closer to being profitable," said one of HomeGrocer's early investors, speaking on the condition of anonymity. "But Webvan spoiled it by telling such a big story to Wall Street. Now the business is on the verge of going away."

Webvan executives say that in retrospect HomeGrocer's design for $10 million warehouses was smarter than its $35 million wonders.

"If I were going to start over again, I would go with an infrastructure that would allow us to serve a market and add features as it grows," said Robert Swan, Webvan's president.
</quote>
posted by jjg at 11:28 AM on July 9, 2001


the one cool thing about this is i get to keep those five cool plastic bins that've been sitting on my back porch since january. knew i didn't mind that deposit for a reason...
posted by patricking at 11:46 AM on July 9, 2001


I remember when they were giving out 20$ no minimum coupons with free delivery. Guess how much stuff I got?

The problem I have with all these online supermarkets is their prices and selection. I would rather go to a grocery store on my way home from work.
posted by Witold at 11:47 AM on July 9, 2001


I wonder if they'll sell all those cool handhelds. Did kozmo ever liquidate their assets?
posted by mathowie at 12:39 PM on July 9, 2001


Never underestimate the speed and power that a buck might bring:

Webvan Stock certificate for sale at ebay
posted by mathowie at 12:45 PM on July 9, 2001


Webvan was a total godsend during college. It was just so tremendously convenient. Someone to lug cases of Diet Coke up multiple flights of stairs! Ice cream and Doritos and champagne arriving right when I got done with finals, as if by magic! To say nothing of saving the valuable hour of driving and shopping and re-parking and lugging everything halfway across campus....

Ah well. What a bummer, though.
posted by youhas at 1:16 PM on July 9, 2001


[ here's the thread on community supported agriculture. I added a review of one local farm at the end for those in the bay area who are interested. and with a medium box I have more than enough for 2 of us at approx $18/week. ]

I used to use webvan once a month or so to deliver lots and lots of liquids, kitty litter, and anything heavy. as they kept raising their minimum delivery fee, I found it to be harder and harder to make an order. especially since I'm vegetarian; do you know many bags of lentils it takes to bring your order up to $75?????

what makes me mad is that they bought out home grocer, thereby depriving us of a system that might work.

with a time machine, I'd go back, back, back and buy microsoft stock; go forward to 1998, sell half of it and buy home grocer and just sit it out. "patience, grasshopper...."
posted by rebeccablood at 1:36 PM on July 9, 2001


Did kozmo ever liquidate their assets?

Kozmo junk shows up on eBay with embarrassing regularity.
posted by aaron at 1:44 PM on July 9, 2001



The REAL reason that Webvan failed as a company is that someone approved putting a logo with NEON GREEN in it on a BEIGE van.

I think the real reason they failed as a company is because they CHANGED their logo 6 months ago. I wonder how much it cost them to repaint all those vans.

And another thing, what was up with those weird TV ads they had? Where the woman wandered around like a zombie and babbled at strangers about how she didn't have time to shop?
posted by culberjo at 2:40 PM on July 9, 2001


Kozmo junk shows up in my t-shirt drawer with embarrassing regularity as well.

(I'm still waiting to find a orange bike messenger bag from them)
posted by mathowie at 2:41 PM on July 9, 2001


Elsewhere, I wrote (much in the same vein as jfuller):
Of course, I, like many others, am completely responsible for Webvan's demise. For as much as I loved what Webvan did, I rarely, if ever, used them because it was always too difficult to assure that I would be at home (or at work) when they arrived. What would have worked for me is to have an agent who knew exactly what I wanted when I wanted it and, assuming they were completely trustworthy, had a key to my house, which they would use to deliver the groceries to my refrigerator.

I guess that's asking a bit much...
I always told people that one day you'd have a webvan vehicle staking out neighborhoods just waiting for the call.

Me in bathroom: Computer, I need toilet paper

Computer: On it's way sir

Webvan guy: *Knock knock*

Me: Errr, computer, can you get that?

Computer: I'm sorry Jay, but I'm afraid I can't do that
posted by fooljay at 7:18 PM on July 9, 2001


Webvan also paid very little attention to supply chain issues and costs associated with direct delivery. Tesco in the UK did and they have profitable direct delivery service. Of course, Tesco already has the infrastructure in place, they just tuned it a bit better to deal with direct deliveries.

I wouldn't be too disappointed. Groceries are learning from Webvan's failure and others' success and they are implementing next-generation direct delivery even as we speak.
posted by costas at 4:46 AM on July 10, 2001


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