WebVan: A Disaster on the Web

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

Case Details:


Case Code : BSTR090 For delivery in electronic format: Rs. 300;
For delivery through courier (within India): Rs. 300 + Rs. 25 for Shipping & Handling Charges


Internet companies
Case Length : 13 Pages
Period : 1999 - 2001
Organization : Grocery Express, Webvan.
Pub Date : 2004
Teaching Note : Available
Countries : USA
Industry : Online Retailing


This case deals with the failure of the online grocery website webvan.com. During its launch Webvan received a large amount of funds from several venture capitalists, which it invested in the development of an automated technology platform for its warehouses. The case discusses at length Webvan's extravagant lifestyle and how it continued to spend even with declining profit margins. It also discusses in detail the strategic alliances entered into by the site and the fallout of these partnerships. It then elaborates on the e-tailing model of the site. Finally, it analyses Webvan's decision to close its store in mid-2001, due to huge financial and logistical problems. The case also takes a brief look at other online grocers who were not successful.


Analyze the business model of Webvan, an online store launched with great expectations and discuss how its plans differed from those which preceded it

Study the strategies adopted by Webvan to begin as an online grocer and eventually expand its range of products


  Page No.
One More Dotcom Bust 1
Background Note 2
Webvan's E-Tailing Model 4
Fall of Webvan 6
What Went Wrong? 8
Exhibits 9


Failure, online grocery, website, webvan.com, large, amount, funds, venture capitalists, invested, development, automated technology platform, warehouses, extravagant, lifestyle, profit margins, strategic alliances, fallout, partnerships, e-tailing, model, 2001, financial, logistical problems, online grocers

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