Comments on: Remember Webvan? So Does Amazon

By: James Elswick

Wed, 19 Aug 2009 05:23:24 +0000

Webvan was a great idea, 20 years ahead of it’s time. If I remember correctly the Bay area Location was profitable, they should of started small then expanded over time. People in that area were upset when it closed down. Online grocery will regain popularity now with this generation that can and will order groceries from there iphone.

By: Food, US style at Silversprite

Food, US style at Silversprite — Sun, 24 Aug 2008 15:05:08 +0000

[...] Convenience. Shops, cafes, restaurants, Starbucks everywhere. Online shopping is commonplace, and even Amazon are doing grocery deliveries in Seattle. [...]

By: The Software Abstractions Blog

The Software Abstractions Blog — Tue, 15 Apr 2008 05:59:29 +0000

Web 2.0: The Real Opportunity Lies Ahead of Us…

JP Rangaswami wrote an amazing post on his blog a little while ago: Interesting, but of no commercial value , in which he cites a series of examples of new technologies – like email and spreadsheets – that were initially…

By: Amazon Fresh y el acercamiento al mundo de los supermercados « ConsumoWeb

Amazon Fresh y el acercamiento al mundo de los supermercados « ConsumoWeb — Sat, 25 Aug 2007 17:12:25 +0000

[...] información en Ajax Blog y TechCrunch. Via [...]

By: pwb

pwb — Mon, 20 Aug 2007 21:36:27 +0000

Just because WebVan failed inthis area doesn’t mean Amazon will. It’s a hard business but not impossible. WebVan’s major downfall was that it expanded too rapidly. There was no synergy or cost savings in rolling out in multiple markets. Further, Amazon will be in a position to do unique things such as ship books more inexpensively. The haters should lay off a bit.

By: Jalyn

Jalyn — Sun, 19 Aug 2007 00:33:23 +0000

hi nice post, i enjoyed it

By: Amazon Fresh Shopping Bag Spotted In The Wild

Amazon Fresh Shopping Bag Spotted In The Wild — Fri, 17 Aug 2007 01:38:20 +0000

[...] pictures are starting to come in of Amazon Fresh, their new Webvan-like grocery delivery service. What I’d really like to see is a review of [...]

By: Jeff Sandquist

Jeff Sandquist — Tue, 14 Aug 2007 20:04:55 +0000

i was able to take a picture of an amazon Fresh Truck this morning in Bellevue, WA.

Photo is on my blog at http://jeffsandquist.com

By: Neil J. Squillante

Neil J. Squillante — Sun, 12 Aug 2007 05:33:00 +0000

I’ve ordered from FreshDirect every week since it opened in late 2002. Why the dot-com era online grocers didn’t start in New York I have no idea — population density doesn’t get any better plus New York has awful grocery stores. That combination plus great execution rocketed FreshDirect to success. Lately, many Gristedes locations have closed. Good riddance to those filthy stores.

By: The Bitt

The Bitt — Mon, 06 Aug 2007 16:19:43 +0000

Amazon Fresh May Succeed Where Webvan Did Not…

TechCrunch’s Michael Arrington has a post about Amazon Fresh, which is Amazon’s entry into delivering fresh groceries to the home. It’s clear from the comments in the post and the comments from readers that people are skeptical.
Chec…

By: WebbAlert Day 2: This Show Rocks | Tekjuice.com

WebbAlert Day 2: This Show Rocks | Tekjuice.com — Sat, 04 Aug 2007 02:55:49 +0000

[...] only giving the show a thumbs up in the hope for TechCrunch mentions (there was one today for our Amazon/Webvan story, for example). They’re right, but for the wrong reasons. I’m genuinely excited to see [...]

By: Amazon Fresh at Kaizen Bits

Amazon Fresh at Kaizen Bits — Sat, 04 Aug 2007 02:44:14 +0000

[...] also, mind you) but Amazon steps forward offering a high-quality selection of fresh products. As TechCrunch points out, it is a new invite only service that looks eerily similar to the quintessential 90’s Internet [...]

By: Daryn

Daryn — Fri, 03 Aug 2007 23:47:10 +0000

Spotted a truck again today.. Here’s a blurry picture from my blackberry.

http://daryn.vo...9a47440004.html

By: John Gallaugher

John Gallaugher — Fri, 03 Aug 2007 17:44:49 +0000

The folks pointing to FreshDirect are correct to identify a model that works, albeit in NYC – a market with very special characteristics. I’ve lectured on FreshDirect in the past. Here’s a (crummy quality) podcast pointer to a year+ old lecture, but it does cover strategy issues (http://www.gall...spring2006.html – scroll to first two lectures). I’d be interested in comments from any who have insights on AMZN Fresh vs. FreshDirect. The evolution in this maket makes a great & constantly evolving teaching case.

By: Cal

Cal — Fri, 03 Aug 2007 17:21:40 +0000

I’m certain this is going to be the future of the grocery industry. WebVan was crushed under the cost of its own capital. I think Amazon.com has the stuff to make this happen.

I really want to get my company involved in this. Does anyone have any advice on how to approach Amazon? I have an address to send proposals, but I’m not sure I know how to put a proper proposal together. Should we do something like we would do for investors? Is a mailed proposal really the best way to go?

By: Bud West

Bud West — Thu, 02 Aug 2007 20:46:21 +0000

Who can forget Webvan? It was supposed to be the wave of the future for grocery shopping. Though, I think that Amazon is better positioned to make it work because of it’s name and existing customer base.

By: Lee

Lee — Thu, 02 Aug 2007 20:43:11 +0000

This doesn’t sound any different from Pea Pod. This is nothing new and is not a reincarnation of Webvan. It’s just Amazon copying Pea Pod which has been going strong on the East Coast since before the .com bust!

I would say it is like Blockbuster vs. NetFlix. The classic story of big business taking an inovative idea and trying the crush the little guy!

By: Boomzilla

Boomzilla — Thu, 02 Aug 2007 19:28:31 +0000

Re: “plus supermarkets don’t even bother doing this because they know it’s not profitable.” – er Safeway does it and they are profitable.

By: John

John — Thu, 02 Aug 2007 16:55:11 +0000

In response to one of the first questions, it’s in Seattle because that’s where Amazon is located. In terms of small scale rollouts for testing, they usually start in Seattle.

By: Kate

Kate — Thu, 02 Aug 2007 16:50:15 +0000

@John.
That would be true if these services were trucking the goods from the closest supermarket to the customers, in the same way that people drive the the closest or one of the closest supermarkets most of the time. However, the door to door grocers (not the supermarkets that deliver like Albertsons etc) are cheap because they buy in bulk, and truck in food from warehouses out in the boonies. That means that they’re driving longer distances, often on freeways, to get into the city, then driving all around the city to deliver. I don’t know about you, but when I drive to the store, I don’t go across town, and I rarely take a freeway.
Also, in large cities like new york, few people drive to the market at all, meaning that users of fresh direct are absolutely increasing emissions.
Sure, these services are easy, and for people who have a hard time getting around they may be useful. But for everyone else, it’s a huge waste.

By: Ben

Ben — Thu, 02 Aug 2007 16:32:31 +0000

selling food is a notoriously rough business – whether it’s a grocery store, restaurant, distributor etc, it’s tough to make a profit. If a grocery store makes 2 cents on the dollar it is considered a great success

By: Craig

Craig — Thu, 02 Aug 2007 16:32:23 +0000

HomeGrocer was awesome…they did everything right including having a name that perfectly described their business so that their trucks (which had a fresh, clean design) were rolling billboards. If Webvan (dumb name) hadn’t bought them out they probably would have done very well.

By: Niraj

Niraj — Thu, 02 Aug 2007 16:23:35 +0000

As many have mentioned already, Peapod has been doing this successfully for many years. They’re still expanding, and I don’t see any signs of them doing poorly or losing money. It looks like they’re currently only in the Midwest and East Coast though:

http://www.peap...umerIndex.jhtml

By: RedStapler

RedStapler — Thu, 02 Aug 2007 16:05:22 +0000

I used to work in the food distribution business. The company I worked for supplied 40% of the McDonald’s in the US as well as every Red Lobster, Olive Garden, Chik-Fil-A, Arby’s, TGI Friday’s, Chili’s and others. We had 16 warehouses, 9 of them were 1 million+ Square Foot warehouses spread throughout the country.

At the time, the company I word with had $9 Billion in sales, and only had $12 Million in profit. This is no Startup but a company that had given Ray Kroc his seed money to start McDonald’s and was very experienced. We were able to calculate that on average, our profit was 5 cents a case.

I can tell you exactly why Webvan failed, and why Amazon needs to take it slow, and the risks involved.

1. Dry / Refrigerated / Frozen – I order to supply grocery items, you must have a warehouse that is temperature controlled. That is not cheap. Since Freon (CFC’s) were banned due to the Ozone layer, alternatives for coolant now include Ammonia. Ammonia is highly toxic and deadly. It is used as a refrigerant. To comply with State / Fed / Local Environmental statutes when building and running a distribution center like this costs a lot of money. Special spacesuits need to hand on the walls in case of emergency, a retention pond needs to be on site to dilute ammonia in an emergency. All these things contribute to the high cost of building a dist center.

Then you have the product itself. The company I worked for only supplied Case Goods (No fresh fish or produce). You really have to know what you are doing to handle produce. Banana shelf life is a lot different that tomatoes, etc. Better to let the local produce guys handle that. It is their specialty. Fresh fish is also a major problem. Better to let the experts handle that as well.

2. Route Planning / Distribution – In planning your deliveries and routes you have to be ultra sensitive to time and cost, especially with gas prices, traffic / congestion. Then you have to plan the delivery window of when you are going to deliver. You also want to group your deliveries together as much as possible to make your deliveries as efficient as possible.
I’m not even talking about the actually transportation issues. We had a huge fleet of refrigerated semi trucks. Or drivers were bound by federal laws. They could only be on duty 10 hours. Only 8 hours of driving. If they ran out of hours while on a route, they had to pull over and wait for another truck to come and take over the delivery.

Distribution, especially food distribution when you add complexities of refrigeration has extremely tight margins. If you do not know what you are doing going in, your mistakes will be very costly. You’ve got to add in all those warehousing, trucking, inventory, and labor costs before you even see a dime.

By: Antje Wilsch

Antje Wilsch — Thu, 02 Aug 2007 15:48:50 +0000

Nice to see Natali back on TC