Webvan
Webvan was an online grocery delivery company that began taking orders in the San Francisco Bay Area in June 1999, spent heavily on automated warehouses and filed for bankruptcy in July 2001, laying off about 2,000 employees.
What happened and why it matters
Webvan is the classic warning about building fulfillment capacity ahead of demand. It hired Bechtel under a $1 billion plan to build up to 26 highly automated warehouses, and in 2000 it reported sales of $178.5 million against expenses of $525.4 million. Grocery delivery has thin margins, perishable inventory and costly last-mile routes, and Webvan's facilities ran far below the volume needed to cover their cost. Later grocery operators scaled more gradually with store picking, dark stores and micro-fulfillment centers. Anyone planning warehouse automation today faces the same test of whether order volume will justify the fixed cost.
People
Related events
Sources
- Webvan (Wikipedia) en.wikipedia.org
- What Webvan could have learned from Tesco (Knowledge at Wharton) knowledge.wharton.upenn.edu