Webvan Tempts Fate, Goes National - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
News

Webvan Tempts Fate, Goes National

San Francisco Bay area Internet grocer Webvan Group Inc. is going national. The news comes as one competitor, Peapod Inc., wrestles with major financial and leadership headaches.

Webvan is building state-of-the-art distribution centers nationwide to support its expansion to 14 more cities, which kicks off this month with service in Atlanta. It's incorporating warehouse-management software from Optum Software in the new centers.

Last month Peapod lost both CEO Bill Malloy, who resigned due medical problems, and then a $120 million equity investment, which was going to pay for new distribution centers. Since then, Peapod's stock tumbled to $3 a share, a fraction of its initial value, casting uncertainty on the entire market and bringing Webvan's stock down from a high of $14 in March to a low of $8.

Webvan is says it will avoid Peapod's fate. Whereas Peapod's distribution model was based on sending employees to neighborhood grocery stores to gather grocery items and deliver them, Webvan invested in a highly automated distribution centers designed for fulfilling thousands of orders a day. "You must have the right combination of technology and business processes," says Peter Relan, senior VP of technology for Webvan. "The more you throw a lot of people and labor at it, the less profitable you become."

Some analysts say, given the required capital investments, only a few of the 20 or so home-delivery companies will survive. Those that are well-funded, offer services nationally, and expand beyond groceries to offer books, videos, and such will make it. "Logistics technology is vital," says AMR Research analyst Chris Newton. "These companies are not in the grocery business--their business is delivery."

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
State of the Cloud
State of the Cloud
Cloud has drastically changed how IT organizations consume and deploy services in the digital age. This research report will delve into public, private and hybrid cloud adoption trends, with a special focus on infrastructure as a service and its role in the enterprise. Find out the challenges organizations are experiencing, and the technologies and strategies they are using to manage and mitigate those challenges today.
Commentary
Enterprise Guide to Edge Computing
Cathleen Gagne, Managing Editor, InformationWeek,  10/15/2019
News
Rethinking IT: Tech Investments that Drive Business Growth
Jessica Davis, Senior Editor, Enterprise Apps,  10/3/2019
Slideshows
IT Careers: 12 Job Skills in Demand for 2020
Cynthia Harvey, Freelance Journalist, InformationWeek,  10/1/2019
Register for InformationWeek Newsletters
Video
Current Issue
Getting Started With Emerging Technologies
Looking to help your enterprise IT team ease the stress of putting new/emerging technologies such as AI, machine learning and IoT to work for their organizations? There are a few ways to get off on the right foot. In this report we share some expert advice on how to approach some of these seemingly daunting tech challenges.
White Papers
Slideshows
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Sponsored Video
Flash Poll