Abstract

This case deals with the failure of the online grocery website webvan.com. During its launch Webvan received a large amount of funds from several venture capitalists, which it invested in the development of an automated technology platform for its warehouses. The case discusses at length Webvan's extravagant lifestyle and how it continued to spend even with declining profit margins. It also discusses in detail the strategic alliances entered into by the site and the fallout of these partnerships. It then elaborates on the e-tailing model of the site. Finally, it analyses Webvan's decision to close its store in mid-2001, due to huge financial and logistical problems. The case also takes a brief look at other online grocers who were not successful.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Analyze the business model of Webvan
• how its plans differed from those which preceded it
• The strategies adopted by Webvan to begin as an online grocer and expand its range of products.

Keywords

Failure, online grocery, website, webvan.com, large, amount, funds, venture capitalists, invested, development, automated technology platform, warehouses, extravagant, lifestyle, profit margins, strategic alliances, fallout, partnerships, e-tailing, model, 2001, financial, logistical problems, online grocers