Internet World Magazine

Age : 45 Joined : 08 Mar 2008 Posts : 1850

WebVan’s arrogance (or was it ignorance?) seemed to mock those of us for whom business fundamentals such as respecting an existing value chain appeared more necessary and vital, rather than less, when competing on the Web. Sure, disintermediation sounds great, but in a “too good to be true” sort of way.

WebVan’s biggest problem was getting into the grocery business where margins are only 1 percent, and that is for real brick-and-mortar stores.

There’s no way that WebVan could have turned a profit with the enormous expenses that they were incurring with their service.

Anyone with experience in the grocery business realizes that WebVan wouldn’t make a dime from their business model. If delivering groceries could be made into a profitable business, don’t you think supermarkets would already be doing this now?

Your article on the death of WebVan was dead on. However, you mention that Peapod is “the one true survivor in this space.” Yes, Peapod has survived, but they also have been lured into the fantasy that central distribution centers can be profitable. There is another survivor here in Southern California: WhyRunOut. As one of the larger investors in this model, we are proud of their statistics:

It has one of the most savvy grocery executives on their board: Mr. Tom Fields, ex-CEO of Alpha Beta, Ex-COO of American Stores, and current board member of Campbell Soup and Stater Brothers.
It also has on its board Rob Ukropena, founder, chairman, and CEO of Overnite Express, a FedEx-like logistics operation serving all of California.
It recently bought the remains of PD-Quick (aka Pink Dot).
It has grown by over 30 percent per month for the last 12 months.
It achieved profitability in May of this year and has remained profitable to date.
Its 2001 “run rate” was projected to be $1.5 million. As of June, the run rate had grown to $15 million.
Its model is to shop out of local shopping centers, and to deliver not only groceries but virtually anything that can be bought in a shopping mall, such as dry cleaning, videos, film processing, and so on.
All this has been accomplished with zero VC money and less than $2 million of angel money. I thought you’d want to know that there were others that never bought into the WebVan fantasy.

That was a great article on eBay and WebVan. But I’m curious: How can someone like WebVan lose $700 million when all I need is $7 million to create a radio station in Boston to compete with the consolidation monopolies of the media?

I think it’s wrong that radio stations are a closed “public” society that is cheating people like you and I out of lots of money while the Net loses money—lots of money. It’s wrong that radio has more space with technology that is, in essence, trying to replicate what is already illegally closed, uncompetitive, and monopolized (“oligopolized” is the correct word, but not many know of it)—the radio band.

No High Fives for the Big Five

The Big Five have several years of accumulated expertise that make them a good bet if companies are trying to get a second opinion on their initiatives [“The Big Five’s Boom,” Aug. 1, p. 20]. At the same time, I fail to see why companies use them for implementing the solution. Sure, the Big Five have done it before, and can point to successful implementations. So can firms that specialize in that particular area. For example, for ERP implementations, a little bit of research on the part of the company will help it identify a company that is focused on that niche and can probably execute better than the Big Five.

In this era of cost consciousness, another big trend that is fast emerging?is offshore outsourcing. This service is something that companies would find hard pressed to find in a Big Five consulting firm. Middle managers like to use a flame-thrower on a fly to make sure they do not get burned if something does go wrong, but I suggest?a little bit of research would help them find the right company for a specific problem, with better service and at a lower cost.

I had to respond with my comments to your article “The Big Five’s Boom.”?Pardon my boldness, but what a joke! The write-up on PricewaterhouseCoopers alone is enough to prove the article a fallacy. I was one of the casualties of the PwC mass layoffs. I was a top manager who was billable 90 percent of the year and was rated in the top 5 to 10 percent of my peers. I also was on the Transora engagement. It was not more than three months ago that I had two other job offers and was convinced to stay at PwC by partners who talked about the long term vision of the firm and my role in it.?Well, here I am.

The thought that these firms—at least PwC—are thinking long-term and are concentrating on highly competitive areas is laughable. For months we were told that e-business was the future of the firm.?Many of us poured our blood, sweat, and tears into the formation of Transora and the e-markets practice in the firm. In the end, this meant nothing.?Myself and many of my colleagues from Transora were laid off.?More that 50 percent of PwC’s e-market knowledge has walked out the door because of the firm’s lack of long-term vision and their immediate need to improve their profit and loss column. PwC is going through their sixth round of layoffs in a year, and the staff whom they are “separating” appear to be their top performers and those with deep e-business knowledge. Explain this one.

The Name Game

I enjoyed your article on corporate and brand naming [“What’s in a Name?” July 15, p. 20].

The main value of a company name is not how it is perceived externally. The main value of a company name is how it is perceived internally, especially by top execs.

When those people answer their phone, when they hand out business cards, when they tell people who they work for, when they instruct their sales reps, when they instruct their ad agency, if they love their company name, they will say it with pride, with self-confidence, or even better, with energy. Others will pick up on those positive attitudes. A better name in the abstract, if they don’t dig it, is not a better name in practice.