Editing Webvan

{{Short description|Bankrupt technology company}}
{{Infobox company
| name          = Webvan
| logo          = Webvan logo.jpg
| caption       =
| fate          = [[Bankruptcy]], resurrected by [[Amazon.com]] in 2009
| foundation    = {{start date and age|1996}}
| defunct       = {{end date|2001|6}}
| location      = [[Foster City, California]], U.S.
| industry      = [[Online retailer]]
| key_people    =
| products      = [[Grocery]]
| num_employees = 3,500 (at its peak)<ref name=shutsdown/>
}}

[[Image:Webvan.jpg|thumb|Webvan]]
'''Webvan''' was a [[dot-com company]] and [[grocery]] business that filed for [[bankruptcy]] in 2001 after 3 years of operation. It was headquartered in [[Foster City, California]], United States. It delivered products to customers' homes within a 30-minute window of their choosing.<ref>{{cite news| url=https://money.cnn.com/1999/11/30/technology/webvan/ | title=Online grocer expands | work=[[CNN]] | date=November 30, 1999}}</ref> At its peak, it offered service in ten US areas: the [[San Francisco Bay Area]]; [[Dallas]]; [[Sacramento, California|Sacramento]]; [[San Diego, California|San Diego]]; [[Los Angeles]]; [[Orange County, California]]; [[Chicago]]; [[Seattle]]; [[Portland, Oregon]]; and [[Atlanta, Georgia]].<ref name=quitsaltlanta/> The company had hoped to expand to 26 cities by 2001.<ref>{{cite news | url=https://money.cnn.com/gallery/technology/2015/03/02/dot-com-flops/2.html | title=10 big dot.com flops | first=David | last=Goldman | work=[[CNN]] | date=March 2, 2015}}</ref>

Long after the failure of Webvan, the concept of companies delivering groceries very quickly grew from about 2020, and several companies were vying for business from [[dark store]]s.<ref>{{Cite news |title=Beware the emergency avocado: what does ultrafast delivery really cost us? |last=Kale |first=Sirin |newspaper=The Guardian |date=9 December 2021 |url= https://www.theguardian.com/business/2021/dec/09/beware-the-emergency-avocado-what-does-ultrafast-delivery-really-cost-us }}</ref>

==History==
[[Image:Webvan logo.png|thumb|Webvan logo as seen on an orphaned shipping bin]]
Webvan was founded in the heyday of the [[dot-com bubble]] in 1996 by [[Louis Borders]], who also co-founded [[Borders (retailer)|Borders]] in 1971.<ref>{{cite news | url=https://www.businessinsider.com/louis-borders-webvan-founder-hds-2014-4 | title=The Founder Of A Dot-Com Disaster Is Giving His Old Grocery Delivery Idea Another Shot | first=Jillian | last=D'Onfro | work=[[Business Insider]] | date= April 18, 2014}}</ref>

===Growth===
The company's investors pressured it to grow very fast to obtain [[first-mover advantage]].<ref>{{cite book | url=https://books.google.com/books?id=FZ4ttymUuwcC | last1=Finkelstein | first1= Sydney | last2=Harvey | first2=Charles | last3=Lawton | first3=Thomas | title=Breakout Strategy: Meeting the Challenge of Double-digit Growth | publisher=[[McGraw-Hill Education]] | year=2007 | page=200 | isbn=978-0-07-145231-1 }}</ref> This rapid growth was cited as one of the reasons for the downfall of the company.<ref name="techcrunch">{{cite news | url=https://techcrunch.com/2013/09/27/why-webvan-failed-and-how-home-delivery-2-0-is-addressing-the-problems/ | title=Where Webvan Failed And How Home Delivery 2.0 Could Succeed | first=Peter | last=Relan | work=[[TechCrunch]] | date=September 27, 2013}}</ref> Webvan started taking orders in the San Francisco Bay Area in June 1999.<ref>{{Cite book | title=The Wisdom of Failure: How to Learn the Tough Leadership Lessons Without Paying the Price | last=G. Weinzimmer | first=Laurence}}</ref>

Webvan placed a $1 billion order with [[Bechtel]] to build its warehouses, and bought a fleet of delivery trucks.<ref>{{cite news | url=https://www.cnet.com/news/seeking-relics-amid-webvans-ruins/ | title=Seeking relics amid Webvan's ruins | last=Wolverton | first=Troy | work=[[CNET]] | date=October 30, 2001}}</ref> In 2000, Webvan bought [[HomeGrocer]], a competitor that was also losing money, for $1.2 billion in stock.<ref>{{cite news | url=https://money.cnn.com/2000/06/26/deals/webvan/ | title=Webvan goes shopping | first=Luisa | last=Beltran | work=[[CNN]] | date=June 26, 2000}}</ref><ref>{{cite news | url=https://www.nytimes.com/2000/06/27/business/webvan-will-acquire-homegrocercom.html | title=Webvan Will Acquire HomeGrocer.com | first=LAWRENCE M. | last=FISHER | work=[[The New York Times]] | date=June 27, 2000}}</ref> At its peak in 2000, Webvan had $178.5 million in sales but it also had $525.4 million in expenses.<ref name="shutsdown" />

===Financing===
[[Benchmark Capital]], [[Sequoia Capital]], and Borders each invested $3.5 million in the company in a [[Series A round]] in 1997, buying shares for $9.58 each.<ref name=lessons>{{cite news | url=https://www.sfgate.com/bayarea/article/Venture-lessons-in-Webvan-collapse-Financing-2899418.php | title=Venture lessons in Webvan collapse / Financing history a cautionary tale | first=Carol | last=Emert  | work=[[San Francisco Chronicle]] | date=July 15, 2001}}</ref> Sequoia later invested another $50 million, [[Softbank Capital]] later invested $160.3 million, and Goldman Sachs' venture arm invested $50 million.<ref name=lessons/> [[E-Trade]] and [[Yahoo!]] each invested $10 million.<ref name=lessons/> In total, venture capitalists invested more than $396 million in Webvan.

The company raised an additional $375 million in an [[initial public offering]] in November 1999, during the [[dot-com bubble]] that valued the company at more than $4.8 billion.<ref name=stockprice>{{cite news | url=https://www.nytimes.com/1999/11/06/business/webvan-stock-price-closes-65-above-initial-offering.html | title=Webvan Stock Price Closes 65% Above Initial Offering | first=MATT | last=RICHTEL | work=[[The New York Times]] | date=November 6, 1999}}</ref> Up to that time, the company had reported cumulative revenue of $395,000 and cumulative net losses of more than $50 million.<ref>{{cite web | url=https://www.sec.gov/Archives/edgar/data/1092657/000089161899004914/0000891618-99-004914.txt | title=FORM 424(B)(1), Webvan Group, Inc | publisher=[[U.S. Securities and Exchange Commission]] | date=November 5, 1999}}</ref>

===Management===
None of Webvan's senior executives or major investors had any management experience in the supermarket industry, including its CEO [[George Shaheen]], who had resigned as head of Andersen Consulting (now [[Accenture]]), a management consulting firm, to join the venture.<ref name=stockprice/> Webvan had a contract to pay Shaheen, who gave up a $4 million per year salary at Andersen, $375,000 per year for life.<ref>{{cite news | url=https://money.cnn.com/2001/05/16/technology/webvan/index.htm | title=Webvan pays off Shaheen | work=[[CNN]] | date=May 16, 2001}}</ref> When the company filed bankruptcy in July 2001, Shaheen was an [[unsecured creditor]].<ref>{{cite news | url=https://lasvegassun.com/news/2001/jul/09/nevadans-lose-jobs-at-nets-webvan/ | title=Nevadans lose jobs at 'Net's Webvan | work=[[Las Vegas Sun]] | date=July 9, 2001}} "The company's list of unsecured creditors will include Webvan's former CEO George Shaheen, who resigned in April, triggering a clause in his contract that required the company to pay him $31,250 per month for the rest of his life. With the bankruptcy, Shaheen "will have to get in line with the rest of our creditors," Grebey said."</ref> Shaheen resigned in April 2001, while the company was on the verge of shutting down.<ref name=quitsaltlanta>{{cite news | url=https://money.cnn.com/2001/04/26/technology/webvan/index.htm | title=Webvan quits Atlanta | work=[[CNN]] | date=April 26, 2001}}</ref>

===Bankruptcy===
The company lost over $800 million and shut down in June 2001, filing for  [[bankruptcy]] and laying off 2,000 employees.<ref name=under>{{cite news | url=https://www.sfgate.com/news/article/Webvan-goes-under-Online-grocer-shuts-down-2901586.php | title=Webvan goes under / Online grocer shuts down -- $830 million lost, 2,000 workers fired | first=Ray | last=Delgado | work=[[San Francisco Chronicle]] | date=July 9, 2001}}</ref><ref name=shutsdown>{{cite news | url=https://money.cnn.com/2001/07/09/technology/webvan/ | title=Webvan shuts down | work=[[CNN]] | date=July 9, 2001}}</ref> As part of its shutdown process, all non-perishable food was donated to local food banks.<ref>{{cite news | url=https://www.zdnet.com/article/webvan-bags-it-for-good-5000117745/ | title=Webvan bags it for good | work=[[ZDNet]] | date=July 9, 2001}}</ref><ref>{{cite news | url=https://www.cnet.com/news/webvan-delivers-its-last-word-bankruptcy/ | title=Webvan delivers its last word: Bankruptcy | first=Greg | last=Sandoval | work=[[CNET]] | date=September 7, 2007}}</ref>

==Reasons for failure==

Commentators point to several reasons for Webvan's failure:
* Aggressive expansion to many cities without proving its business model in its first market<ref>{{cite web|url=https://www.forbes.com/sites/petercohan/2013/06/17/four-lessons-amazon-learned-from-webvans-flop/|title=Four Lessons Amazon Learned From Webvan's Flop|first=Peter|last=Cohan|website=Forbes}}</ref>
* A business model targeting price-sensitive mass-market consumers rather than upmarket consumers who would be more profitable<ref name="techcrunch" />
* Building its own warehouses and fulfillment infrastructure from scratch,<ref name="techcrunch" /> in contrast to services such as [[Peapod]] which survived the dot-com bust and used the infrastructure of existing supermarkets (as did the later [[Instacart]])

[[CNET]] named Webvan one of the largest dot-com flops in history.<ref>{{cite news|url=https://www.cnet.com/uk/news/the-greatest-defunct-web-sites-and-dotcom-disasters/|title=The greatest defunct Web sites and dotcom disasters|last=Lanxon|first=Nate|date=November 18, 2009|work=[[CNET]]}}</ref>

==Legacy==
[[Image:Webvan tubs.png|thumb|Thousands of webvan tubs survive as household storage bins]]

A large number of Webvan's colored plastic shipping tubs are now used for household storage.<ref>{{cite book | url=https://books.google.com/books?id=XhaT6YMWDuwC&pg=PA54 | page=54 | last=Aboujaoude | first=Elias | title=Virtually You: The Dangerous Powers of the E-Personality | publisher=W. W. Norton & Company | year=2012 | isbn=978-0393340549}}</ref> The company's distinctively shaped vans, now repainted, are still seen.

Some executives of the company went to work for [[Amazon.com]].<ref>{{cite news | url=https://www.reuters.com/article/net-us-amazon-webvan/from-the-ashes-of-webvan-amazon-builds-a-grocery-business-idUSBRE95H1CC20130618 | title=From the ashes of Webvan, Amazon builds a grocery business | first=Alistair | last=Barr | work=[[Reuters]] | date=June 18, 2013}}</ref>

From about 2020 many companies were vying to provide ultrafast delivery, similar to the Webvan concept.

==See also==
{{Portal|San Francisco Bay Area|Companies|Food|Internet|1990s}}
{{Clear}}

==References==
{{Reflist}}

==External links==
*[https://web.archive.org/web/*/http://www.webvan.com Archives pages of Webvan]

{{Dot-com Bubble}}

[[Category:1999 initial public offerings]]
[[Category:Online retailers of the United States]]
[[Category:American companies established in 1996]]
[[Category:Retail companies established in 1996]]
[[Category:Transport companies established in 1996]]
[[Category:Internet properties established in 1996]]
[[Category:American companies disestablished in 2001]]
[[Category:Retail companies disestablished in 2001]]
[[Category:Transport companies disestablished in 2001]]
[[Category:Internet properties disestablished in 2001]]
[[Category:Defunct companies based in the San Francisco Bay Area]]
[[Category:Defunct Softbank portfolio companies]]
[[Category:Companies that filed for Chapter 11 bankruptcy in 2001]]
[[Category:Defunct websites]]
[[Category:Online grocers]]
[[Category:Dot-com bubble]]
[[Category:Defunct online companies of the United States]]