An example of E-commerce Failure and Causes (0)
Monday, February 02, 2009 by , under E-Commerce, Failure, Week 3
Do you still remember Webvan? The Webvan was an the online "credit and de
livery" grocery business. Webvan Group Inc. headquartered in Foster City, California, USA with its proximately 2,600 workers and about 2000 stores. To become the number one online grocer, Webvan managed their way through a tangled web of operational changes. Besides that, the failure of Webvan is also an interesting failure, it was started in 1999 by Louis Borders, founding partner of Borders Books. Unfortunately, On 9 July 2001, Webvan went bankrupt and began its liquidation.
Webvan, which began selling groceries over the Internet about two years ago(1999-2001) and was unprofitable, they blamed that the declining orders and difficulty in raising more cash to stay alive. Besides that, Webvan also invested in technology and an infrastructure that was too expensive for low margin products. Webvan’s founder, Louis Borders, had experience with larger margin products, where profits are not solely dependent on volume. Webvan expected a high adoption rate to their e-grocer business, however, people were skeptical about the lack of control over the quality of the product. Thus, the lack of volume in grocery sales was the main factors that affected to the lack of debt repayment.
Finally,there are also some reasons that affected their sales. Webvan wants to implement a new business strategy that provides within 30 minutes delivery to their customer. However, this strategy seems like a failure as some of the customers are not at home or away at the time. Moreover,the delivery service may delayed due to certain problem and caused customer do not believe in them and thus, the sales gone!
On 9 July 2001, Webvan went bankrupt and began its liquidation. Besides that,Webvan also sold all its assests to delegate from the Nasdaq Stock Market.
livery" grocery business. Webvan Group Inc. headquartered in Foster City, California, USA with its proximately 2,600 workers and about 2000 stores. To become the number one online grocer, Webvan managed their way through a tangled web of operational changes. Besides that, the failure of Webvan is also an interesting failure, it was started in 1999 by Louis Borders, founding partner of Borders Books. Unfortunately, On 9 July 2001, Webvan went bankrupt and began its liquidation.Webvan, which began selling groceries over the Internet about two years ago(1999-2001) and was unprofitable, they blamed that the declining orders and difficulty in raising more cash to stay alive. Besides that, Webvan also invested in technology and an infrastructure that was too expensive for low margin products. Webvan’s founder, Louis Borders, had experience with larger margin products, where profits are not solely dependent on volume. Webvan expected a high adoption rate to their e-grocer business, however, people were skeptical about the lack of control over the quality of the product. Thus, the lack of volume in grocery sales was the main factors that affected to the lack of debt repayment.
Finally,there are also some reasons that affected their sales. Webvan wants to implement a new business strategy that provides within 30 minutes delivery to their customer. However, this strategy seems like a failure as some of the customers are not at home or away at the time. Moreover,the delivery service may delayed due to certain problem and caused customer do not believe in them and thus, the sales gone!On 9 July 2001, Webvan went bankrupt and began its liquidation. Besides that,Webvan also sold all its assests to delegate from the Nasdaq Stock Market.
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