TABLE OF CONTENTS
ANALYSIS OF CASE DATA3
Vision and Mission3
Competitive Analysis – Porter’s Five Forces6
Key Drivers for the Recommendation9
Revised Webvan Vision9
Revised Webvan Mission10
Revised Webvan Business Model10
Revised Webvan Revenue Sources10
The goal of this report is to make a recommendation to Webvan’s management team whether Webvan, once the largest online grocery enterprise in the United States and a large investment failure, should be restarted as a new enterprise using the original strategy and business model before the company went bankrupt in 2001. Webvan began in 1998 as an innovative business idea that excited and drew support from investors already caught up in the dot-com phenomenon. The company ultimately failed to attract and sustain an adequate customer base to justify the large investments it made in the development of high-tech information technology systems and elaborate distribution warehouses. Team 21 was hired to explore the key elements of Webvan's original business model and provide relevant recommendations and action steps to the company's management.
ANALYSIS OF CASE DATA
Team 21 analyzed Webvan's original business model, decisions, and milestones using several strategic analysis tools, such as analysis of the external environment , SWOT analysis and Porter's Five Forces analysis. Furthermore, it reviewed the company's value disciplines and identified the key mistakes in the original business model. The results of the review provide insight to the company’s problems and serve as a basis for the development of the recommendation to Webvan's management.
Vision and Mission
The vision and mission are the key drivers of the analysis and recommendations, as they are also the drivers of Webvan's original business model.
Webvan's vision was to provide a faster, cheaper and more efficient way of delivering items to consumers.
Webvan's mission was to deliver the last mile of e-commerce to the increasing number of people making purchases online by creating an enterprise that would provide a greater variety of products than a conventional store while still providing the instant gratification that online shoppers miss.
Economic, sociocultural and technological factors had significant influence on Webvan's business and therefore are the focus of the PESTLE analysis.
Economic – Although Webvan garnered considerable favor among investors, it faced an almost insurmountable obstacle in trying to convince customers to relinquish discretionary income in favor of the convenience of grocery delivery. Much of Webvan’s early success in attracting investment can be attributed to the large amount of investor interest in speculative Internet-based companies between 1995 and 2001, which is often referred to as the “dot-com bubble .” In April 2001, when Webvan needed an infusion of $25 million to continue operations, it found the bubble had burst, and investors were no longer putting money into online ventures. The end of the dot-com era led to the beginning of a mild recession , which likely served to put the final nail in Webvan’s coffin. Even without the recession, customers had shown an unwillingness to spend additional money on delivery fees when most lived within a convenient distance of a grocery store that accepted coupons not accepted by Webvan. Finally, supermarket chains had developed an economic model that is tightly efficient. The physical store also serves as a warehouse, existing technology started being used for customer self-checkout, and in-store shelf-space management and strategic product placement programs were being utilized to improve profit margins. Webvan’s...