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The First E-Commerce Delivery Service?
Amazon and almost all the other e-commerce high-rollers depend on traditional delivery services like UPS, Federal Express, and DHL. Last I heard, while most online merchants seem to be taking big losses, package delivery companies were becoming more profitable than ever because of e-commerce.
Webvan is headed by Louis Borders, one of the two brothers who founded Borders Books and Music in 1971 and started borders.com in 1997. As soon as Webvan gets some of its new distribution centers running, I expect to see them offer deals like "free book delivery with any grocery order" that other online retailers can't match.
So forget groceries. Webvan could become the first e-commerce company that would have its own "direct to your door" delivery service and keep all the "shipping and handling" fees instead of putting them in other companys' pockets.
If I were Jeff Bezos, Webvan would scare me. And if I were selling almost anything other than books or food online, I'd be scrambling to cut a delivery deal with Louis Borders right now, before everyone else in the e-commerce business figures out that a "Webvan" could deliver almost anything that could conceivably be sold over the World Wide Web.
The conventional wisdom is that anything you can run down to the corner store to fetch is a lousy direct marketing item. There are exceptions, like those overpriced steaks you can order in the mail. These guys, however, seem to think their vans and warehouses are cheaper than stores to operate. If they are right, then it means the end of big, ugly, cookie-cutter stores. Stores would have to be places you actually want to go. Nothing wrong with this. High value items, like PCs, will continue to be delivered by FedEx and UPS. But I can definitely see some of the in-between items, like clothes and books, becoming the object of strategic investments by, say, L.L. Bean, etc., so that stock can be prepositioned for delivery at lower cost. On the other hand, the grocers may have a few cards to play: automated checkout and more efficient distribution can extend their lives. The really interesting thing about this is that if it really works, it's one of those poductivity enhancements that actually bumps up the GDP growth rate in a sustainable way. Much to the consternation of luddites who will wonder aloud what kinds of jobs the kind of people who bag groceries for a living will be able to find. I recently heard someone on NPR ripping Amazon for taking away mall jobs from kids who might be working at Barnes & Noble (this is on the days this same guy is not too busy ripping mall developers).
I wrote parts of this stuff
If Webvan is plotting to usurp UPS and FedEx in the pacakge distribution business, they have a lot of catching up to do. The scale of operation of UPS and FedEx is huge, and the barriers to entry are high. It takes a looooong time to build up an operation like that, including the time-to-market on such durable products as cargo-outfitted 747s.
UPS and FedEx are very efficient operations. They also make tons of cash, and can fford to lower their prices temporarily to squeeze out a bit player like WebVan.
-jwb
1) Bill Gates' head on a stick.
/. page.
2) Heather Graham, on a stick. Or not on a stick. Pretty much just not gonna happen.
3) The end of Top X lists. Ha. That'll be the day.
4) An Open Sourced version of Windows.
5) A quick-loading
6) A executive/manager/insert-supervisor-title-here that has common sense. Especially where you work. Yes, you!
7) A life.
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