An example of an E-Commerce failure and its causes

In this business world, there was many business work sucessful and also many business went bankrupcy everyday. One of an example of an e-commerce failure is Webvan. Webvan was an online credit and delivery grocery retailer. Webvan was founded in the heyday of the dot-com boom and it was started in 1999 by Louis Borders, the co-founded of Borders bookstore. While the investors saw the first mover advantage strategy popularized by Amazon.com was so sucessful and can gain so many market share and they start to do the online groceries industry as to gain the first mover advantage.

Firstly, the company offered e-groceries services in ten U.S. market and hoped can expand to 26 cities. Webvan use a customer satisfaction model to retain their customer which is 30 minute window delivery without considering that many working customers would like their groceries delivered at home at night. The company spent an extraordinary amount of money in a short term and pure play as an internet retailer but unfortunately the company also failure and need to shut down in year 2001.

What are the factors cause Webvan failure?
The root cause of Webvan's failure was its promise to deliver groceries at the same price as in-store service, which was unable to do profitably. Webvan limited the number of deliveries available per time slot, based on truck availability, in an effort to increase drop density and reduce costs. In other words, Webvan reserves the right to refuse service to any customer without a matching improvement in picking efficiency. Secondly, there have poor management team. None of Webvan's senior executives or major investors had any management experience in the supermarket industry, including its CEO -- George Shaheen. The management of virtual space carries with it temporal consequences, and vice versa. Virtual stores operating `24 hours' also require 24 hours call centres to act as helplines for confused customers, new customer registrations, and for order problems.

Besides, one of the problem is while Webvan popular, the money spent on infrastructure far exceeded sales growth, and the company eventually ran out of money. Webvan failed because of infrastructure costs of more than US $30 million per fulfilment warehouse and accumulated losses of US $815 million on sales of $271m. Lastly, Webvan also failed to capitalise on the abundant publicity the media afforded them, and the list of outright failures grows ever longer. Above are all the factor and causes why E-Commerce can be failure.