An example of an e-commerce failure and its causes

Webvan was an online ' credit and delivery ' grocery business, it company's headquatered in Foster City California, USA, which is nearby Silicon Valley. There strategic business is have try to deliver products to customers' within 30 minute window of their choosing and it offered service in ten United Stated markets. There are San Francisco Bay Area, Dallas, San Diego, Los Angeles, Chigago, Seattle, Portland, Atlanta, Sacramento and Orange country. The company had originally hoped to expand to 26 cities.

Webvan was founded in the heyday of the dot-com boom in the late 1990s. The founder of Webvan is Louis Borders, who also co-founded the Borders Bookstore in 1971. Webvan's original investor included Goldman Sachs and Yahoo, who encouraged it to rapidly build its own infrastruture (the first mover advantages strategy popularized by Amazon.com)to deliver groceries in a number of cities.

Webvan was closed in July 2001, the causes of Webvan's closed down was none of Webvan's senior executives (or major investors) had any management experience in the supermarket industry, including its CEO George Shaheen who had resigned as head of Andersen Consulting (now Accenture), a management consulting firm, to join the venture. The another cause is the money spent on infrastructure far exceed their sales growth and the company eventually ran out of money, for example, Webvan placed a 1 billion (USD) order with engineering company Bechtel to build its warehouse, bought a fleet of delivery trucks, purchased 30 Sun Mircosystems Enterprise 4500 servers, dozen of Compaq ProLiant Computers and several Cisco systems model 7513 and 7507 routes as well as more than 80 12-inch view sonic colors monitors and at least 115 Herman Miller Aeron Chairs (at over $800 each). Besides, Webvan tried to embrace a total customer satisfaction model without considering that customer especially working customers would like their groceries delivered at night .

From this, Webvan is unable to survive because of lack of management experience and grow its business too fast. Thus, its best to have a good plan and not grow too fast and too soon.

References: www.cnet.com