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WEBVAN.COM(NASDAQ: WBVN)
The Last Mile of E-Commerce
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FAST FACTSOperations first began in San Francisco in 1999
Now open for business in Chicago, San Francisco, Sacramento, and Atlanta
Atlanta Specifics
• Operations began in Atlanta May 2000
• Employs over 600 individuals
• Competition includes Kozmo, Peapod, and Streamline
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WEBVAN BUSINESS MODEL•The “Last Mile” of e-commerce
•A more convenient, efficient, and cost-effective way to get products to consumers
•What everyone really wants to know: Is it a proven model?
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PRESSROOM New business means constant change…
•“Webvan.com Gives Customers Added Value with Ashford.com Partnership”
• “Webvan Unveils New Redesigned Webstore, New Logo, and Branding Strategy”
•“Webvan and HomeGrocer Agree to Merge”
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SUPPLY CHAINBusiness lies between wholesaler or vendor and consumer
Food and Merchandise (the product) flows “down” supply chain to end consumer
Customer data (order information) flows “up” supply chain to Distribution Center
Manufacturer / Wholesaler relationship is independent of Webvan operations
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WEBSTORE
• Order is relayed electronically to distribution center for processing
• Placed order triggers product flow down supply chain
Order initiated by consumer on-line
• Consumer selects delivery window, compiles product list, and submits order
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STOCKING UPForecasts by Exponential Smoothing
• Demand history in San Francisco
• Vast amounts of customer “hit” data
• “Special Times” - e.g. Thanksgiving - how do they do it?
• Aggregate forecasts are drilled down to product level
Electronic Data Interchange (EDI)
• Purchase Orders automatically submitted electronically to most wholesalers / vendors when nearing reorder point
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WHOLESALERWholesaler establishes product line from multiple
manufactures (Webvan has little control over this relationship)
Supply Breakdown:
• 80% of sales volume handled by Fleming (NYSE: FLM) Wholesales
• 20% of sales volume supplied vendor-direct
Aggregate product list at wholesaler includes:
•Milk/Dairy, Meats, Poultry, General Wholesale, Beverage, Produce, Baked Goods
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RECEIVINGProduct shipment cost “paid by supplier”
Incoming shipments arrive in vendor vans, semi-trucks, or independent carriers to one of 18 loading docks
Most wholesalers / vendors have standing delivery times on a daily or weekly basis
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Manufacturer Atlanta Distribution Center (DC)
• Location: Suwanee, GA
• Peak hours of operation: 12 am-6 am (order packing)
• Facility Size: 350,000 sq. ft.
• Interesting Details:- 50,000+ SKU’s- Facility is the equivalent of 18-20 “standard”grocery stores in volume (sales dollars)
DISTRIBUTION CENTER
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Manufacturer Operational Details:
• Automated order processing system
• Approximately 4.5 miles of conveyor
• Barcode scanning system for tote routing
Tote Identification:
• Yellow- Dry Goods
• Green- Chilled Goods
• Blue- Frozen Goods
DC (continued…)
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MOVEMENT TO STATIONS9 stations serving Metro Atlanta
• Alpharetta• Atlanta (Airport)• Atlanta (Downtown)• Marietta• Norcross• Roswell• Suwanee (also DC)• Tucker• Woodstock
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Each Station is within 1-1.5 hrs of DC
Products travel securely in refrigerated semi-trucks
Standing delivery times to station result in LTL shipments when demand is low
MOVEMENT TO STATIONS
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STATIONSPull system (JIT)
• No inventory stored in totes• Products packed to order
Totes transferred from large semi-trucks to small courier vans
Peak hours of operation: 5-7am and 1-3pm
Chattahoochee StationFloor Plan
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FINAL DELIVERY10-12 courier vans service each station covering 20-30 square miles total
Deliveries scheduled from 7-2pm and 3-10pm
Optimized route printouts assigned to each courier
Courier van has a refrigerated section
Labor costs = 40% of total transportation costs
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IN-HOME SERVICE
1st time customers receive Webvan introduction and promotional incentives
Credit Card Transaction device built into handheld Palm Pilot
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