WEBVAN

By

Avinas , Balaji , Nakul

Neeraj ,Ravi, Rohan

Vignesh

AGENDA

1.Comparison of business models of Webvan vs Peapod

2.Why Webvan failed

3.How Peapod succeeded?

4.Relevant Today

Comparison of business models of Webvan vs Peapod

Sl. No. WEBVAN PEAPOD

1 Huge investment in material procurement in initial stage Partnering with local supermarket

2 State of the art warehouse Hybrid warehouse and small warerooms

3 Huge investment in software Low investment in software and website

4 High delivery charges Membership fee and delivery charge

5 High initial investment Low initial investment

Why Webvan failed?• Invested heavily in High tech automated infrastructure to

expand too quickly

• Its free delivery model for orders over $100 contributed to its doom

• At one point in time its operating costs led to about $130 loss per order.

• Customer demand was not that high enough to operate its facilities profitably.

• It tried to enter 26 new markets within 3 years though none of its warehouses broke even

How Peapod succeeded?

• Peapod only enters those markets where it can team up with existing retailer.

• It follows a business model that emphasizes low entry costs and building a customer base before investing in freestanding centres.

Relevant Today

• Mixed Strategy approach.

• Tread Cautiously in the initial days making alliance with the existing Brick and Mortar grocers, thus saving on initial investment in Warehouse.

• Concentrate more on investing in more mobile technologies and database systems for ordering and order fulfillment.

• Implement efficient demand forecasting technologies and manpower.

• The model is more relevant today, then it was 10 years back.

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THANK YOU!