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eCommerce - Wednesday, April 6, 2005

It's Webvan - Like a Phoenix From The Ashes

The cliched Internet business comment these days is that it feels just like the bubble days. Now even the ghost of Webvan is back, with companies like FreshDirect growing like mad on Webvan's model.

For the past 4 years, the mainstream press has piled on Webvan as the example of all that went wrong back in the day - "who would want groceries ordered online?" The Webvan management team will tell you to this day that there was nothing wrong with the offer - people loved it - but their get-big-or-go-home financing model brought them down when Wall Street cut them off. They'll even tell you that it would have been a highly profitable business.

The New York Times writes what New Yorkers have been talking about for many months - that the FreshDirect Web-based grocery-delivery business is awesome. In 2004, FreshDirect did $100M in revenues, almost double the sales of 2003. The Times also notes that Minneapolis-based SimonDelivers.com and Peapod in the Northeast have thrived. Given the media backlash against Webvan's model, these guys deserve respect for escaping the herd mentality.

One amusing stat is that FreshDirect has endured $600K in parking tickets over the past two years. Thank you Mr. Bloomberg, may I have another?

Read - Online Shopping Makes New York a Cardboard Jungle (NY Times)