Webvan.com Case Presented By:Case Presented By: Aileen OganesyanAileen Oganesyan Valerie ClarkValerie Clark Farooq SattarFarooq Sattar Veasna ChuonVeasna Chuon Rolando FuentesRolando Fuentes Tim CampbellTim Campbell Arthur ParonianArthur Paronian

Introduction --Founded By Louis Borders --Set out to create a full service online retailer that offered the customers a convenient and affordable way to shop for groceries and other items online

Introduction Cont.  - In April of 1999, the company changed its name to Webvan.  -Launched it’s operations in the San Francisco Bay Area in June  -Built vast infrastructure containing 330,000 square foot warehouse to effectively store and deliver merchandise to customers

Introduction Cont.  -Webvan used hub-and-spoke model, similar to FedEx and UPS for delivery.  -Customers ordered online and chose a 30 minute window for delivery.  -At one time featured 20,000 products, including prepared meals for sale.

Consisted of creating a sophisticated and highly automated information systems centered around warehouses.Consisted of creating a sophisticated and highly automated information systems centered around warehouses. Webvan’s Business Model

Industry Background Offline market $550 billionOffline market $550 billion Plus home supplies $750 billionPlus home supplies $750 billion Online sales $234 million in 1998Online sales $234 million in 1998 Grocery shopping is not a consumer favorite.Grocery shopping is not a consumer favorite.

Competitors PeapodPeapod StreamlineStreamline Net grocerNet grocer Home GrocerHome Grocer AlbertsonAlbertson OthersOthers

Operational keys for Webvan's success Less expensive and Compare pricesLess expensive and Compare prices Provide perishable goods.Provide perishable goods. Digitized grocery orders.Digitized grocery orders. Cost efficiencyCost efficiency Time efficiencyTime efficiency

Operational keys for Webvan's success (cont) Operated from a single 330,000 square-foot distribution hubs in Oakland, California, carrying 18,000 SKUsOperated from a single 330,000 square-foot distribution hubs in Oakland, California, carrying 18,000 SKUs Software development and administration.Software development and administration.

Environment key to success for Webvan Publicized ventures in e-business.Publicized ventures in e-business. $1 billion deal between Webvan and Bechtel corporation to build distribution centers in 26 U.S cities by 2001.$1 billion deal between Webvan and Bechtel corporation to build distribution centers in 26 U.S cities by Save consumer time and money.Save consumer time and money. 70%Repeat customers.70%Repeat customers. 30 minutes window delivery.30 minutes window delivery. Friendly customer service than competitors.Friendly customer service than competitors.

Environment key to success for Webvan (cont) No cost for delivery.No cost for delivery. No cost of membership.No cost of membership.

Target market for Webvan Metropolitan areas such San Francisco Bay, Atlanta, Georgia, Chicago and SeattleMetropolitan areas such San Francisco Bay, Atlanta, Georgia, Chicago and Seattle New Technologist.New Technologist. Time Starved Shopper.Time Starved Shopper. Price Insensitive Shopper.Price Insensitive Shopper.

Webvan's value proposition Extensive line of grocery and non grocery items for comparable prices.Extensive line of grocery and non grocery items for comparable prices. Borders hoped that he could eventually offer all of this value to consumers, without charging high prices, membership fees, or even delivery fees.Borders hoped that he could eventually offer all of this value to consumers, without charging high prices, membership fees, or even delivery fees.

Webvan's value proposition (cont) $100 in order to meet its forecasts.$100 in order to meet its forecasts. Webvan believe that same day distribution system can position them as a preferred on line provider for many consumer products that can be delivered to the home.Webvan believe that same day distribution system can position them as a preferred on line provider for many consumer products that can be delivered to the home. Oakland warehouse would break even in as few as 60 days.Oakland warehouse would break even in as few as 60 days.

Conclusion Webvan believes that their same day distribution system can position them as one of the most preferred on line providers for many consumer products, making them a nationwide household name in the future.Webvan believes that their same day distribution system can position them as one of the most preferred on line providers for many consumer products, making them a nationwide household name in the future.