An example of an e-commerce failure and its causes

Webvan was founded by Louis Borders in the year 1999. Yahoo and Goldman Sachs are considers as original investors of Webvan, who encouraged it to rapidly build its own infrastructure to deliver groceries in a number of cities. Webvan try to build a new image for grocery store by publish window delivery which take only 30 minutes to receive the groceries at over 26 cities in American.
However, there are a lot of complaints towards customer services provided which state that the orders have to take one day or more in advance. It is an error seriously compromises the concept of instant delivery and thus it become one of the reasons for demand drop.

In fact, the expansion of webvan is also view as growing too fast as the sales are insufficient to cover up its expenses. It has invested much of their money on the infrastructure which includes automated warehouses, a fleet of vans and logistics software. All these investment are in purpose to reduce the real estate fees and employees payment via the help of technology. Furthermore, the fundamental assumptions of Webvan are also a mistake. This is say so because the consumers don’t mind and won’t stop from step into grocery shop and stand in the long queue instead of online booking. Some analysts also claim that the senior executives are lack of management experience in the supermarket industry. Finally, the company unable to cover up its loss and file the bankruptcy in year 2001. Webvan is now recognized as one of the dotcom failure in history.