Evidence 3 Report discussing what went wrong PDF

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Evidence 3: Report discussing what went wrong

Nátany Borrego Tovar

Tutor Omar Valbuena

Sena

International physical distribution

Bogotá 2021

WEBVAN A contingency plan is extremely useful if something goes wrong. By identifying potential problems, you’ll be able to take action to prevent them from happening. A plan will also give clear instructions on what to do if an incident does take place. 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. At its peak, it offered service in ten US markets: the San Francisco Bay Area; Dallas; Sacramento; San Diego; Los Angeles; Orange County, California; Chicago; Seattle; Portland, Oregon; and Atlanta, Georgia. The company had hoped to expand to 26 cities by 2001. Webvan is well-known as the poster child of the dot-com “excess” bubble that led to the tech market crash in 2000. The grocery delivery service grew too fast, expanding its services to eight cities in just a year and a half. In the summer of 1999, Webvan announced that it was making a $ 1 billion investment in wineries and that it would begin operating in 26 other cities by 2001. When it did its IPO in November 1999, this company raised $ 375 million, the stock was trading at about $ 30, and the company was valued at $ 1.2 billion. But that was his peak. Investors soon realized that the company's customer base and margins were not large enough to sustain all expansion plans. By the time the company announced it would cease operations in July 2001, Webvan's stock fell to just 6 cents a share. This company laid off 2,000 employees when it closed.

Some of mistakes 

Wrong target audience segmentation and pricing: it was a mass-market strategy and the target audience therefore was not selected to be “price insensitive.”

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Complex infrastructure model: Webvan decided to build its infrastructure from scratch. After conveying the item to automated carousel pods, which would spin like juke boxes to transfer the item in question into the tote, the entire process would rinse and repeat until the order was completed and integrated at the shipping dock.

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Too much money, expanded too fast: This is the more well-known and final mistake. Most people view Webvan’s capital raise of $800 million as excessive and ill-spent. The pressure to “grow big fast” in those days blotted out all other considerations. This desire for massive, immediate growth was so intense that we started launching in new cities on the thesis that the unit economics of home grocery delivery would be profitable.

Some recommendations 

Webvan should have priced at least 30 to 40 percent higher and ignored the customers who didn’t want to pay those prices.

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It would have been better leveraging the existing infrastructure of grocery stores that building their own infrastructure from scratch.

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Create an additional channel through which you could reach your current customers and get new ones, and then try to provide multiple channels to those customers that you had previously captured.

REFERENCES https://cnnespanol.cnn.com/2015/03/16/10-grandes-fracasos-de-empresas-punto-com/ https://digital.hbs.edu/platform-rctom/submission/webvans-demise-or-when-technologyfails-to-meet-operations/ https://www.forbes.com/sites/petercohan/2013/06/17/four-lessons-amazon-learned-fromwebvans-flop/ https://digital.hbs.edu/platform-rctom/submission/webvans-demise-or-when-technologyfails-to-meet-operations/...