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  1. #1
    Sports Publisher mjames's Avatar
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    WebVan runs out of gas

    WebVan filing for bankruptcy has made a lot of news in the tech department lately and has added another failed dot-com to the list of failures. Coverage: http://news.cnet.com/news/0-1007-201...html?tag=tp_pr

    What's your feeling of online grocers and do you think WebVan's direct competitor, which will now likely benefit from WebVan going out of business, PeaPod, will survive? I am skeptical of this, but PeaPod appears to be in good shape. Have you ever purchases from an online grocer like WebVan or PeaPod? If so, were you pleased? If not, why not? For me, it was because it wasn't available in my area!

  2. #2
    SitePoint Enthusiast jmjinks's Avatar
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    This doesn't surprise me one bit. I never suspected much success out of an online grocer. I've been a strong believer that the only e-commerce sites (other than the porn sites) that will easily make many at the present are those providing services or those that offer products that are not widely available already. Why would someone want to purchase their groceries online when the grocery store is just two blocks away? This is part of the reason why Amazon is losing money. If eveyone has heard of Amazon, everyone has access to Amazon and Amazon is a household name, why are they losing money? Because it is still easier to walk to you local boookstore and buy the lasest book there.

    Just my two cents.

  3. #3
    SitePoint Enthusiast malleron's Avatar
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    Well, one reason that I bought from an online grocer was so I didn't have to drag my 2-year-old daughter out for the 2+ hours it usually took to move through the always-heavy shopping traffic to get what I needed, stand in line, pay for my stuff, load it in the car, drive home, unload the car, and put everything away. At some point during these treks I could expect my child to start throwing a fit out of sheer boredom, which is something I would wish only on my very worst enemy. Even though the grocery store was less than a block away from my house, the sheer convenience of getting *everything* I needed online (while my 2-year-old was blissfully playing) and having someone deliver it and unload it was worth every penny. I got more stuff done when I used an online grocer, and my daughter was much happier being able to do her own thing on her own schedule.

    After that, the next major benefit for me was being able to buy items that my grocery store down the street didn't carry (and wouldn't carry because the immediate community wouldn't support it), in particular organic items and other whole foods. Where I live the only place to get good-quality stuff like that was on the other side of town, which was usually a 40 minute drive. Not something one wants to do with perishables (and a tired and irritated toddler) in the car on a hot Texas day. At least the online grocers used refrigerated trucks.

    Incidentally, the sevice I used was HomeGrocer.com, which was subsequently acquired by WebVan. When WebVan closed the service in the Dallas area, I was exceedingly miffed. The only other game in town, aside from Peapod, is GroceryWorks, and I have not been too impressed with their service. And Peapod is just too expensive to justify using all the time. Admittedly, HomeGrocer spoiled me -- they were on time, they had lots of delivery windows, they had free delivery for orders over $75, their drivers were always in a good mood, their customer service was top-notch, and they had what I needed in-stock when I needed it. Price-wise, they were comparable to what I was already paying for similar stuff, but on some things (like the organic stuff) they were a bit higher. But as a consumer, I can justify a higher price for something if I can't get it as easily elsewhere and if the service helps me in a significant way.

    Now I think GroceryWorks is taking a different delivery tack -- they're stationing themselves at certain local grocery stores, picking orders off the shelves, and then delivering within a certain radius of each store. Sort of like personal shoppers for groceries. While that might be a better business decision for GroceryWorks, it seems rather pointless to me as consumer since there is no longer any incentive to use them. There isn't any added selection and the prices are what you see everywhere else. So, it makes more sense for me to get my groceries myself now, even though it's still an utter chore and takes more time than I would like. At least now my daughter is a little older and better able help out or entertain herself.

    As I think about it more rationally, I'm finding that, from a business perspective, the concept of online groceries is a doomed one. It's incredibly expensive operating a grocery store anyway -- adding home delivery and increased product scope into the mix without raising prices to compensate makes it prohibitive. Plus I don't think most people are ready for online grocers. Where groceries are concerned, most people really like to hold stuff in their hands, compare prices among a limited number of brands, and make their own decision to buy. It's a very involved, tactile process and online grocers take that away, which makes most people uneasy and therefore unwilling to support the concept.
    Jenny

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    ...living the backstory...

  4. #4
    What's HTML?
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    jmjinks,

    Convenience. People shop online because its convenient. You can buy all your groceries while your kids are taking a nap. You can order a movie in your bathrobe. You can buy flowers without worrying about the availability of a special rose.

    I buy my books at Amazon because it's hard for me to get out.

    Have you ever seen the prices at Amazon? And all the free shipping deals? If I'm not mistaken, Amazon has been losing money since existence because of their prices and promotional deals. They're not losing money on accident, they're still building their empire. Don't worry, they will strike back.
    Ryan Kuhle - A Proud Advisor - Got Questions? Just Ask!
    Get your website started for less than $20! Click Here

  5. #5
    SitePoint Enthusiast jmjinks's Avatar
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    I don't quesion the convenience factor, Ryan. The fact that you can order everything from a a loaf of bread to a car, shows that people will buy almost anything over the internet. And people will continue to do so as the market grows.

    The main question, and concern, is the business model that these companies use. If buying groceries over the internet is going to be like the personal shopper who runs out, buys the groceris for you and you pay extra for the convenience, not as many people will shop as if the prices were comparable to the local grocery store.

    On the other end of the scale, the reason that companies like Amazon are going broke is not strictly that they are priced comparable or cheaper than the retail brick and mortar store; Amazon's problem is that they are basing their model on brick and mortar. They have large overhead because of large warehouses and having to pay staff to oranize stock. If you have a 1000 copies of every book, but not everyone is buying certain titles, you are wasting money that could be used for other things.

    The real money for "e-tailers" are those who have a "store-front" on the web, but do not carry stock. The successful "e-tailers" will have agreements with manufactuers and distributors to "drop-ship" the product to the consumer. Less overhead means more room for profit. That is the business model that is going to lead companies to success on the net.

  6. #6
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    webvan is dead and gone now, but the ceo got out just fine i hear... he sold pretty much everything before their downfall.

  7. #7
    Sports Publisher mjames's Avatar
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    Yes, apparently $2.4 million from selling stock a month before they closed doors. I could be wrong, though. I hear something to that tone.


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