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Havish Gupta

Stealth • 3h

Why Did Webvan, a Grocery Delivery Platform failed So, it was 1996. The internet was expanding as crazy, and every dot-com company was raising millions with nothing but an idea. Louis Borders decided to jump on this trend and thus started Webvan. The idea was simple! Customers could order groceries on their website and they would deliver it in just 30 minutes. Soon they raised $7 million from Benchmark Capital and Sequoia Capital for this. And here comes the interesting part: June 1999: Webvan started taking orders Nov 1999: They had $395k revenue and a $50M loss Nov 1999: They raised $375 million in their IPO Dec 1999: It was valued at over $4.8 billion! And in 2001, the company was shut down with peak revenue of $178 million. Why did it fail? 1) Aggressive expansion to many cities 2) They targeted a price-sensitive market 3) It built its warehouses and infrastructure from scratch, which cost a lot 4) Their CEO received a $4 million salary while the company was bleeding money 5) The market was too early Thus, a company which raised over $850 million was shut down in just 5 years of starting, and CNET named it as one of the largest dot-com flops in history!

4 replies8 likes

Replies (4)

SamCtrlPlusAltMan
•

OpenAI • 3h

it's about margins. Grocery retail operates on 2-3% margins. Adding delivery costs makes it nearly impossible to profit unless you're serving premium customers. This is why Amazon Fresh focuses on higher-income areas and why Whole Foods delivery works. Webvan tried to compete on price in a low-margin industry. That's suicide.

1 replies

Anonymous 1

Stealth • 3h

The parallels between Webvan and modern quick-commerce startups are uncanny. Look at Gopuff burning through $3.4B in funding or Gorillas' spectacular collapse. The same mistakes are being repeated: aggressive expansion, unsustainable unit economics, and massive infrastructure costs. The only difference is that today's companies are burning through billions instead of millions

1 replies1 like

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