Will Surf for Food - A Tale of Two Webvans

SAN FRANCISCO (04/24/2000) - Purely for investigation, of course, two PC World editors turned to the Web for food. One ducked a hated trip to the store for virtual grocery shopping on Webvan; the other tested the site's culinary skill by ordering a gourmet meal for a weekly supper group with discriminating tastes. Here are their reports.

Webvan rocks. That's a professional opinion, from a Web journalist, e-commerce junkie, and avowed grocery store despiser.

Webvan trucks started meandering through suburbia in the San Francisco Bay Area in June 1999. Its premise is promising: Order groceries and other good stuff over the Web, and Webvan delivers it to your door within a 30-minute delivery time that you select. Deliveries are free if your order totals more than $50; otherwise it's $4.95. And no tipping is allowed.

Webvan also offers a break for the chef; alternatively, you can order entire meals from the site with similar delivery.

Though the service is available only in the San Francisco area now, Webvan plans to launch delivery next in Atlanta, Chicago, and Seattle.

His Digital Grocery Excursion

I registered for service, then picked a delivery date and time. Webvan offers half-hour delivery slots from 7 a.m. to 10 p.m. I shopped on a Sunday morning and the day's slots were filled, so I chose delivery between 8 and 8:30 p.m.

Monday. (Subsequent visits prove it's difficult to arrange a same-day delivery.) The Web site is easy to navigate. Tabs along the top take you to all the major categories--Home, Shopping, Help, and so on. I spent most of my time in the Shopping area, where the product categories break down into hierarchical lists.

Top-level categories include Prepared Foods, Bakery, Produce, The Dairy Case, and Drugstore. It's easy to browse and to search for a specific product.

The site has an impressive inventory, and price comparisons show that Webvan prices are within a few cents of major-label items at a grocery store.

Overall, buying groceries online is a pleasant experience, especially on a broadband connection. My first visit took close to an hour to work through all the digital aisles. But you can save your shopping list, so future visits go much faster.

A few drawbacks: the inability to squeeze your own melons and other produce, no mechanism for using newspaper coupons, and no free samples. Also, Webvan doesn't provide nutritional labels for some products, which could be a problem for some people.

Plenty of Time

Such drawbacks are minor to me. I finished shopping, plugged in credit card information, and sent my order. I returned a few hours later and successfully added a few forgotten items to the order. (Webvan generally lets you add or remove stuff until 9:30 p.m. the day before delivery.) At 8:27 p.m. Monday, Webvan delivered. The food arrived in bins separated by temperatures (chilled, frozen, and ambient). The driver was polite and carried in the groceries. She helped me remove everything so she could take the bins (otherwise, there's a $3 deposit per bin).

The first thing I noticed about my order was the produce. I ordered a combination of organic and regular stuff, and it all looked great. Everything else was pretty much exactly what I expected.

Her Online Taste-Test

When one of the Webvan shoppers in our weekly supper group discovered that Webvan will deliver prepared appetizers, entrees, side dishes, and salads, we knew it was time to put our money where our mouths were--or vice versa.

It was surprisingly easy for each of us to find something on Webvan's menu that suited our fancy. Even my boyfriend and I, devout vegetarians, found not the usual single meatless entrée but a variety of vegetarian options.

Webvan's site as a whole, in fact, is well organized and easy to navigate. Each major product category, such as Produce, is broken down into more specific categories--Fruit, Mushrooms, Tomatoes--and some further subcategories.

Ordering our feast was easy: We plunked everyone's entrée and side dish choices, plus wine and dessert, into our account's shopping cart (the advantage of virtual shopping carts over real-life ones: no wobbly wheels), entered our payment information (Webvan accepts major credit cards and debit cards), and selected our half-hour delivery window.

Don't Call Late for Dinner

We had to reserve our 7 to 7:30 p.m. delivery slot two days early; by Tuesday, Webvan's open delivery times for our usual Thursday dinner were already dwindling. Here's where Webvan's prepared entrée delivery service stumbles: It would be more useful if you could order a prepared dinner at short notice, in case of unexpected guests or those nights after work when it's daunting to whip up anything more complicated than a bowl of cereal.

Our order did arrive within our selected time, but just barely--by my watch, the truck rolled into the driveway at 7:29 p.m.

Then, the surprise: Our friendly Webvan delivery guy, William, opened a chilled bin to reveal not only the sorbet we'd ordered for dessert, but also all the packaged dishes that were to be dinner. Webvan's site said nothing about how prepared foods are delivered; we assumed the entrees and side dishes would arrive hot, or at least warm, as from a deli counter of a brick-and-mortar grocery store. So much for our no-brainer dinner plans.

The food quality, however, more than made up for the 15 minutes we spent hunched over the stove and microwave in last-minute anticipation. The mashed potatoes, for example, clearly weren't my grandma's, but they had the requisite real-potato lumps to earn this smashed-root-vegetable connoisseur's coveted thumbs-up.

Take It Home

Webvan is more convenient and better organized than your local grocery store:

Try finding packaged oyster mushrooms in less than 30 seconds in a crowded produce aisle. The quality of its prepared entrees certainly beats the day-old fried chicken and strawberry-flavored whipped gelatin at your supermarket's deli counter.

But its chef-prepared meal service has additional possibilities for the busy, the culinarily challenged, and the just plain lazy. It will be done to perfection when Webvan can give customers more last-minute flexibility when choosing their ordering times.

I'm Sold; Now What?

OK, I'm sold on this service. Anything that helps me avoid the grocery store, those annoying people who block an entire aisle with their carts, and schlepping $100 worth of food from the car works for me. Great produce and decent prices are a bonus.

So before I get used to this extravagance, I have a question for the folks at Webvan. How the heck can you make money doing this?

Webvan makes money by eliminating the middleman, cutting real-estate costs, and filling orders very efficiently, says spokesperson Amy Nobile.

The company buys food and produce directly--not from grocery stores--which saves money and nets the best fruits and vegetables, she says.

Its distribution centers are warehouses, so it doesn't spend top dollar on premium land in multiple locations, she says. My food came from Webvan's huge Oakland center, which Nobile says moves the same volume of food as 18 supermarkets. A few smaller centers help serve the suburbs.

The most important aspect of Webvan's operation is its ability to accept an order, pack it, and deliver it with a minimum of wasted time, energy, and money, she says. Its goal is "multiple orders picked and packed with great speed and accuracy."

To do that, Webvan runs a proprietary distribution system that depends on both computers and humans that navigate the Oakland center's 350,000 square feet of space and more than five miles of conveyor belts.

Efficiency, Efficiency, Efficiency

Nobile says Webvan expects each distribution center to break even by its fourth quarter of operation and to make money by the fifth. Webvan's surviving lean times, in part, with $600 million raised in its initial public offering last November 1999.

Webvan has a solid strategy, says Ken Cassar, senior retail analyst with Jupiter Communications. However, its operating efficiencies have yet to be proven.

"It's not clear-cut if it's really less costly," Cassar says. Plus, outside forces like the recent spike in gas prices could wreak havoc on its finely tuned system.

The company also faces some very basic consumer challenges, he says. The largest is probably inertia: People have been going to the grocery store and selecting their own tomatoes for a very long time.

However, the service offers some very compelling features, he adds. It's very convenient, offers a huge selection, plays well to time-starved consumers, and easily handles large orders.

Webvan has competitors, but there should be room for several players. Jupiter forecasts a growth in online grocery shopping in the United States from about $800 million in 2000 to about $7.5 billion by 2003.

Those number sound impressive, but Cassar points out that even the larger number represents a small percent of the total U.S. grocery market.

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