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The First E-Commerce Delivery Service? 43

Posted by Roblimo from the you-knew-it-would-happen-someday dept.
Last week an Internet "deliver groceries to your door" company called Webvan, based in Foster City, California, announced a $1 billion deal with international engineering and construction giant Bechtel to build distribution centers in 26 U.S. markets. But Webvan may be planning to deliver much more than food.

Amazon and almost all the other e-commerce high-rollers depend on traditional delivery services like UPS, Federal Express, and DHL. Last I heard, while most online merchants seem to be taking big losses, package delivery companies were becoming more profitable than ever because of e-commerce.

Webvan is headed by Louis Borders, one of the two brothers who founded Borders Books and Music in 1971 and started borders.com in 1997. As soon as Webvan gets some of its new distribution centers running, I expect to see them offer deals like "free book delivery with any grocery order" that other online retailers can't match.

So forget groceries. Webvan could become the first e-commerce company that would have its own "direct to your door" delivery service and keep all the "shipping and handling" fees instead of putting them in other companys' pockets.

If I were Jeff Bezos, Webvan would scare me. And if I were selling almost anything other than books or food online, I'd be scrambling to cut a delivery deal with Louis Borders right now, before everyone else in the e-commerce business figures out that a "Webvan" could deliver almost anything that could conceivably be sold over the World Wide Web.
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The First E-Commerce Delivery Service? More

The First E-Commerce Delivery Service?

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  • This isn't new, no... (Score:1)

    by Anonymous Coward
    In Norway one company went bankrupt on this kind of enterprise - groceries - back in 1997. A couple of big food chains tried to follow up, but they gave up, too. I don't remember if the first company to start this in Noway survived, but it seemed to work for a while.

    They charged something like 8$ then for shipping unless you shopped for more than 80$.
  • Also, who wants someone else picking out their produce and meat??

    Who picks out your meat or produce when you go to a restaurant though? Maybe the big competitive factor will be the quality of the food you get delivered. If you get mushy lettuce from grocery store A, then you order from store B. Eventually, store A won't give you mushy lettuce anymore.

  • Right, they are just switching the ordering method from phone to web. Why can't Pizza Hut or Domino's do this???
  • Yep, from a "whois countdown9199,com":

    Domain servers in listed order:

    NS1E.AMWAY.COM 208.10.113.2
    NS4.CW.NET 204.70.49.234
  • The conventional wisdom is that anything you can run down to the corner store to fetch is a lousy direct marketing item. There are exceptions, like those overpriced steaks you can order in the mail. These guys, however, seem to think their vans and warehouses are cheaper than stores to operate. If they are right, then it means the end of big, ugly, cookie-cutter stores. Stores would have to be places you actually want to go. Nothing wrong with this. High value items, like PCs, will continue to be delivered by FedEx and UPS. But I can definitely see some of the in-between items, like clothes and books, becoming the object of strategic investments by, say, L.L. Bean, etc., so that stock can be prepositioned for delivery at lower cost. On the other hand, the grocers may have a few cards to play: automated checkout and more efficient distribution can extend their lives. The really interesting thing about this is that if it really works, it's one of those poductivity enhancements that actually bumps up the GDP growth rate in a sustainable way. Much to the consternation of luddites who will wonder aloud what kinds of jobs the kind of people who bag groceries for a living will be able to find. I recently heard someone on NPR ripping Amazon for taking away mall jobs from kids who might be working at Barnes & Noble (this is on the days this same guy is not too busy ripping mall developers).
  • Some people seem to have a problem doing business with Amway. They should probably know that that's who's behind countdown. It's not just going to be shopping site, it's going to be a portal (that won't let your kids get to any porno sites, etc.) It's probably going to be very successful.

  • I live in Berkeley which is conveniently close to their home base. I ordered a bunch of groceries which seemed very comparable in price to the cheaper local grocery stores. Delivery was free since the order was over $50, and I was able to schedule delivery for a 1/2 hour window of my choice on the next day(Saturday).
    I got a call about 45 minutes before expected delivery time saying that they were running about 15 minutes late, making sure that it wouldn't inconvenience me.
    The delivery man arrived right on the revised schedule with color coded plastic bins that he offered to either help me unpack, or that I could hang onto for a $3 deposit until my next delivery.
    Overall, a very satisfying experience. They seem to have a pretty good selection, though right now a number of items are listed as "available soon".
    For the high tech employee in particular where time is a much scarcer resource than money or just about anything else, this is wonderful.
  • They did charge tax on taxable items, but since they are focusing on groceries right now, most of them items are not taxable within the state of California, and I'd have to pay the same tax if I went to a grocery store, so not an issue.
    They are competing against grocery stores right now, not against other forms of Internet e-commerce.
  • The problem with using Fed-Ex ( or equivalent) to deliver web products is that Fed-Ex is point to point. WebVan can have localized warehouses which will maintain inventory. So it's more like a real multi-cast protocol, rather than traditional HTTP. Much lower delivery costs because it has better efficiency of bandwidth (shipping ) Frankly, i think it's a great idea. I'm trying to figure out how to invest.

    -C-
  • You might remember that amazon.com has hired the chief of distribution away from Wal-mart. Wal-mart has the most efficient and inexpensive inventory distribution system in the world.

    If Webvan is plotting to usurp UPS and FedEx in the pacakge distribution business, they have a lot of catching up to do. The scale of operation of UPS and FedEx is huge, and the barriers to entry are high. It takes a looooong time to build up an operation like that, including the time-to-market on such durable products as cargo-outfitted 747s.

    UPS and FedEx are very efficient operations. They also make tons of cash, and can fford to lower their prices temporarily to squeeze out a bit player like WebVan.

    -jwb

  • While I don't currently buy my groceries online I do get a good chunk of them packed and delivered. Specifically things that I rarely buy otherwise at the store - vegetables. This way I don't have to visit the store as often.

    I find it incredibly convenient. I leave a cheque in their delivery box from last week, and they replace the empty box with a fresh one. There's another local service that I've been thinking of trying that does a larger selection of things other than produce.

    I'm pretty satisfied, though sometimes you get items you may not have picked yourself... mushy lettuce, etc.

  • RQ: Who's moderating these posts upward?

    Give it a couple of years. Heather Graham will be available on a stick.

    14:57 . . . tick
    14:58 . . . tick
    14:59
  • FedEx was at the time the largest start up businesss ever, so it's not "it can't be done", it's "it's not done very often."

    It sounds to me that Webvan is trying to be a delivery & logistics service (think warehousing & distribution), which is what tons of e-businesses need, and is exactly what many package services are remaking themselves to be.

    The strange thing is that I've ordered stuff online that has been *drop-shipped* directly from the manufacturer. In that instance, who needs Webvan? I just need the box moved from place A to place B.

    As far as delivered groceries go, we used to have that here in Minneapolis. "The Grocery Wagon" -- you filled out a form, read it over the phone, and they showed up with your food.

    The problem is when they screw up your order (Hydrox instead of Oreos, missed items) you're out that food you wanted until they come back with replacements. Doesn't happen that way in the Grocery store. Also, who wants someone else picking out their produce and meat?? That's an art form, and some wage slave isn't going to do it the same way I do and get the same results.

  • Are people so caught up in the thrill of online grocery shopping that they forget that stuff costs more that way?
    Where I live, there's an Aldi discount grocery store (you bag 'em yourself) which saves up to 60% compared to mainline grocery stores. The types of things I buy are readily available there. The nearby Wal-Mart is open 24 hours, where I can get cat food when one of my finicky kitties runs out of food. But I do try to plan ahead far enough to not let that happen.
    Are the prices in the "high rent districts" like Seattle, San Francisco, Raleigh and New York (city) so bleedin' high that these places make financial sense? Or are their lives so hectic that they can't plan ahead long enough to shop in a store sensibly?
    --
  • I order a tonne of stuff over the web, but most of the time the delivery times are pretty long; I suppose this is because of shipment times from the US to Ireland. If I could order my cornflakes over the web and be sure I had them by breakfast, I'd never leave the house again.
  • And you'll REALLY have something.

    I.E. your neighborhood gets together and forms a group for purposes of brokering better deals on groceries. Everyone submits their list, and the broker gets the best deal: then everyone pays and their stuff gets delivered. If you add ubiquitous shipping, you get the equivalent of a Warehouse Club that comes to you. This may really be the start of REAL E-commerce, the kind that everyone uses. . .
  • Everyone remembers the massive change that came fall of '95, as the web hit mainstream. Well, almost everyone. It seems that the nature of the Internet and related technologys tends to engender a peculiar type of forgetfulness. Most people seem to have forgotten how they worked/played before it all went down, but thats because most people didnt see it comming, and weren't watching their own opinions change.

    Well, here we have a chance to watch it again. True Ubiqitious Online shopping will require a company like this to actualy go mainstream, and in a year and a half, it will be difficult to remember a world /without/ the neighborhood Webvan Guy bringing home the bacon for you.

    -Crutcher
  • mentioned above is fedex and ups - okay now they are just distribution but how long before they wise up and start getting more closely integrated with web retailers? they could absolutely fuck up the businesses of any number of commerce companies by moving into internet commerce...but then again they have a large installed base and we all know big companies don't like to cannibalize.
  • HomeGrocer.com already exists and is delivering food via their own trucks from local distribution centers. They deliver good food, a little bit more expensive, but you don't have to go shopping at the store. The produce they deliver is better than Safeway's and the other stuff is pretty well packaged and fresh. Webvan I don't think was the first as HomeGrocer has been around for about a year now I think.

    Mike
  • Hehe I did part of that web site :)
  • Sounds nice, I suppose, if the concept that Webvan will deliver other products and keep packaging/delivery services from making all the big bucks, but doesn't this also sound like Webvan's looking to become a major monolopy? Like a we-have-and-can-deliver-everything giant.... controlling our very lives! I hope that wouldn't mean that other online sellers would start to depend upon Webvan to deliver their stuff, or if that service would only be available if the customer was originally looking for groceries, and then decided that they wanted other stuff.
  • who's going to buy groceries through fedex/ups? webvan isn't competing in the same space -- yet.
    plus, building a delivery infrastructure for whatever reason exists at the time doesn't hurt. sure fedex and ups (and several others) already have them, but they're thinking about delivery in a very conventional (too conventional) method. (ironically enough, i think it was fedex who's business plan was failed in a business class because it was too unconventional.)

    here's something to think about: with all of the local chain stores, warehouses, and other infrastructure that currently exist in metropolitan areas, why order something from timbuktu with 2-3 day delivery if i can get it the same day locally? the fastest you can really get something is overnight if it's not local. i want to order something in the morning before i go to work and have it when i come home at night. not that the big grocery store warehouse idea from webvan is a bad idea, but wouldn't a purchasing broker/agent/whatever be a better idea? you wouldn't need all of the (physical) infrastructure, just a few deals to sell the mechandise from the existing stores. the computer infrastructure would be a bit more complex, but definately doable if standardized.

    i would hate to see brick and mortar stores go away. everybody's afraid of it in the face of the amazon.com's of the world. something like this would at least leverage the fact they they're already here and local.
  • From what I read, Webvan isn't going to be shipping stuff nationwide, just from the distribution centers to the local areas. They don't have to compete with FedEx or UPS. Of course they could usurp FedEx or UPS because they are shipping their own merchandise from their own distribution centers.
  • Question, my dear /.ers...
    Do any of you currently use a grocery service like this? I have a client trying to build up just such a service, I was wondering what sort of market there is.
    Though I guess if somebody is willing to pour a billion smackers into it then there must be... ;-)
    I can imagine that in traffic-yucky cities like D.C. that this would be a very attractive service.
    Anyone?


    The Divine Creatrix in a Mortal Shell that stays Crunchy in Milk
  • 1) Bill Gates' head on a stick.

    2) Heather Graham, on a stick. Or not on a stick. Pretty much just not gonna happen.

    3) The end of Top X lists. Ha. That'll be the day.

    4) An Open Sourced version of Windows.

    5) A quick-loading /. page.

    6) A executive/manager/insert-supervisor-title-here that has common sense. Especially where you work. Yes, you!

    7) A life.
  • RQ: Who's moderating these posts upward?

    If 20 of your comments are moderated upwards, your comments start at 2. If 10 of your comments get moderated downward, then you start at 0.

    My numbers may be slightly off, but that's the gist of why no moderation totals appear under some promoted posts.

    Some random long ones show up now as well because of the length-promotion-thing Rob implemented last week.
  • A lot of these comments are only scratching the surface. Consider the potential for mating a service like the one webvan provides with a household that can communicate with that service on your behalf.

    For example, a fridge can be built that keeps inventory, knowing what it usually contains and how much of each item, with thresholds for how low supplies can get. A fridge in other words that can realize when it is running low on milk. Some pasta sauce wouldn't hurt either. And maybe the pantry can "know" when it's running low on pastrami and pop-tarts. Et cetera.

    Now co-ordinate that with a central home computer that communicates with the outside world. Among other things, it can keep track of your habits, knowing for example when you get home from work on a given day. The kitchen tell the home system to order a list of groceries. Maybe the bathroom adds that you could use toothpaste. Whatever.

    A bit of automagic folding, spindling, and mutilation takes place, and the house takes the initiative to order your groceries & have them show up an hour after you get home from work. It can place the order, pay with your credit card (assuming you trust it to do so, getting confirmation otherwise), contact you to let you know what's going on (messages like "Hey boss, the house is on fire" would be useful...), et cetera.

    The info gathered by the central computer is passed off to Webvan, your email, the fire department, and so on, and those agencies handle things from there. All you have to do is keep your credit in check and come home from work. Not bad, eh?

    This might not work well in some parts of the house -- a bookshelf that automatically orders the new So-and-so book might be overkill if it doesn't realize you hated So-and-so's last 4 books -- but the potential for these applications is in place now. The needed components -- internal (home systems, online appliances and such) and external (Webvan, Amazon, FedEx) -- are available "off the shelf."

    All that remains is for someone to put the pieces together.

    That person, if s/he does it right, might just be positioned to make Gates look like a peasant.


  • Check out http://www.countdown9199.com. This September the biggest, probably first totally successful e-commerce project will hit the streets. My best guess is appx 4-6 million visits the first day, going up from there. They have poured millions into setting up the site and have the resources to back up that type of traffic and get the goods to the consumers. I order stuff from them right now and it comes to my doorstep via a private delivery system. I really do like ordering through the web, just went book shopping and never left the house.
  • One problem that comes up again and again is having to wait around for delivery. They can't just drop this stuff on your porch. In other words -- to be successful -- the company *must* deliver on time. This simple fact has kept this "new economic" market out of the mainstream.

    Another problem with providing other retail products for online consumption is that consumers want to see and expirement with the product. This goes for many product types such as: electronics (audio and video), clothes, furniture et al.

    Despite this, though, markets such as car sales have flourished -- which is a surprise.

    Opportunity gain:

    1. convenient
    2. better price information (can always check out competitors price with a click)
    3. Possible that products may be cheaper in the future when infrastructure is streamlined enough that costs (shipping, information systems) are outweighed by mass economies of scale.

    Opportunity Cost:

    1. Waiting time for product (many retail purchases are based on impulse and/or an immediate want or need)
    2. Possible shipping problems (including delays and not arriving on time)
    3. loss of information (customer may want to see and touch the product, turn it on, test it etc.)

    Of course, this doesn't exactly apply to undifferentiated, inelastic markets such as groceries -- but it is food for thought (uh, pun intended).

    In some ways, the grocery market is simpler than one with Walmart like products. This is because the demand for food is inelastic -- so consumer trends will be largely static. All they have to do is gain consumer loyalty and iron out shipping problems.

  • Tax? (Score:1)

    by brage ( 90761 )
    But the question I have is since the distribution centers will be local, will they have to charge tax? and if so this may offset the "free shipping" deal! Maybe they will have to offer "free shipping" to be competitive.

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