Webvan.com launched in 2000. The online grocer allowed users to surf their site for food, health and beauty items, which would be delivered to their front door via the company's fleet of trucks and drivers. Webvan "couriers" also carried and unloaded groceries in the shopper's kitchen.The company shut down in 2001. The cause of Webvan bankruptcy is growing too fast. In a mere 18 months, it raised $375 million in an IPO, expanded from the San Francisco Bay Area to eight U.S. cities, and built a gigantic infrastructure from the ground up (including a $1 billion order for a group of high-tech warehouses). Webvan came to be worth $1.2 billion (or $30 per share at its peak), and it touted a 26-city expansion plan.Webvan's abrupt closure wasn't exactly a shock. In its last annual report, the company said there was a strong chance that financial troubles would force the company to shut down.
In the first quarter of the year, Webvan had reported a net loss of $217 million and an accumulated deficit of $830 million. And things only seemed to be getting worse.
"We all knew it was going to happen," said Phil Terry, CEO of Creative Good, a consulting firm that has worked with online grocers. He blamed the company's aggressive expansion into multiple cities, combined with an overly complex website, for causing its demise.
Well, Webvan's demise seemed to have little to do with the quality of its delivery services. Although there are customers who complained of late deliveries or damaged of goods, the grocery services generally received favorable comments from customers.
In fact, Webvan's problems never really had much to do with its customers. It was the lack of customers that was the trouble.
Some people believed that Webvan "may well have 10 or 20 years ahead of its time". And, like many businesses born in the maniacal days of the dot-com boom, it tried to get too big, too fast.
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