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Webvan failure

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Webvan Q1. Describe the Webvan business model and then analyze it using the value chain and competitive forces models. What were the assumptions that drove this business model? Ans: Webvan’s Business Model used the following Points: 1. Revenue in relation to capital investment and margins. 2. Margins in the US grocery business. 3. Obtaining customers at affordable cost. 4. Gross margins compared with cost structure Analysis: 1. According to Webvan huge upfront investment was to be considered Adequate of all other things unlike the perspective of value chain and competitive forces model. 2. Webvan considered Publicity means everyone would know about Webvan but had it emphasized on customer acquisition and cost retention more then it could …show more content…

4. When an unplanned delay occurred, dispatchers called to inform customers who could choose either to accept a late delivery or to reschedule it. 5. The drivers also used the GPS to plot alternate routes to circumvent traffic problems, thereby more easily meeting their schedules. 6. At the home, the driver carried the totes inside and unpacked them. 7. The driver then used a handheld wireless device to print out a receipt and an itemized order list. 8. The device also notified dispatch that the delivery was completed. Role of technology in Ordering Suppliers. 1. Webvan also developed a system of ordering products from its suppliers. 2. Webvan determined what to order based on both actual and expected demand. 3. If an item was not in the warehouse at the time a customer ordered it, Webvan used a rapid and reliable communication Web site (harbinger.net) to automatically inform suppliers. 4. Harbinger software formatted orders for all suppliers and forwarded the orders to them. 5. When goods arrived at a warehouse, receiving opened the cartons and scanned the products. 6. Shelf items were put into trays, and the system used a very complex ―round- robin‖ algorithm to assign each tray to a specific carousel. 7. However, like many of its supermarket rivals, Webvan did little else to automate its supply chain because it was too small to force its suppliers to invest in supply chain technology. Q3.

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