An example of an e-commerce failure & its causes

One of an example of an e-commerce failure is Webvan. Webvan was an online grocery retailer. In the quest to become the number one online grocer, Webvan managed their way through a tangled web of operational changes. Webvan is an interesting failure, it was started in 1999 by Louis Borders, founding partner of Borders Books. The company spent an extraordinary amount of money during its short tenure as the largest and most promising pure play e-grocer.

The reasons for failure of Webvan are because Webvan invested in technology and an infrastructure that was too expensive for low margin products. Webvan’s founder, Louis Borders, had experience with larger margin products, where profits are not solely dependent on volume. Webvan expected a high adoption rate to their e-grocer business, however, people were skeptical about the lack of control over the quality of the product. Thus, the lack of volume in grocery sales was the prime contributor to the lack of debt repayment. With regard to technology, Webvan did not rely on the experience of others. Neither did they have any experience in the grocery market.

Besides, the poor to connect with their customers also may cause their business failed. They want to satisfy the customer so they tried to deliver the groceries in 30 minutes. Although it is a good service but some of the customers would like their groceries to be delivered at night because they were working at day time. Moreover, the deliveries will sometimes be late and the customer was not at home when the van was there.

Thus, on 9 July 2001, Webvan went bankrupt and began its liquidation.