Webvan’s Founder Is Back and He’s Building Another Grocery Delivery Business
Two years after his high-flying online grocery business collapsed into bankruptcy, Webvan founder Louis Borders was quoted as saying that he still very much believed in the business idea. “The opportunity was there, and it is still there,” he said in the interview. “It will come back around.”
That was 2003.
More than a decade later, industry sources say Borders is prepping to finally take another crack at building a successful grocery delivery business. “We are still a bit early yet,” said Borders, also a co-founder of Borders bookstores, responding to an email from Re/code seeking comment. “We will reach out when we move things along.”
News of Borders’ new business comes as giant tech companies such as Amazon and Google, along with upstarts such as Instacart and Relay Foods, have been focusing time and money on building same-day and next-day delivery models for groceries and, in some cases, other goods as well. Older players such as FreshDirect and Peapod continue to slowly add new delivery markets.
But none of these companies have proven yet that their models can work at a national level. For many, Webvan’s story is viewed as a cautionary tale. Amazon Fresh, for example, which employs several former Webvan employees, operated only in Seattle for more than five years before expanding to Los Angeles and San Francisco last year.
Webvan went public in 1999 amid the dot-com rush when it was still operating only in the San Francisco Bay area. But less than two years later, the company shut down after it embarked on an expensive, and ultimately disastrous, expansion plan before it had sufficiently proven that demand and its model were sustainable.
Fast-forward to today, and investors are dubbing Borders’ new business, for better or worse, Webvan 2.0. It’s not clear what name Borders’ new grocery business will actually go by when it launches, but it is referred to as Home Delivery Service in a description on the website of Mercury, the startup incubator that Borders runs.
“The HDS website offers consumers a single online store to shop for fresh foods and general merchandise from the world’s leading retail brands,” the description reads. “In HDS distribution centers, multi-retailer orders are assembled as one lot, packaged in returnable totes and delivered quickly and conveniently by HDS couriers in HDS vans.”
The multi-retailer strategy is one being employed right now by Google, in its Google Shopping Express experiment, as well as Instacart. Google Shopping Express, which is operating only in the San Francisco Bay area, uses couriers to deliver orders from a list of stores that includes Whole Foods and Costco, but also Walgreens, Target and Toys R Us. Instacart, on the other hand, focuses exclusively on groceries and hires shoppers who collect and deliver orders from a handful of grocery chains.
The HDS service will include free, same-day delivery, according to a description elsewhere on the Mercury site, and be built using “patented, automated distribution technology.”
“Our unique technology, business model and supply chain architecture will enable HDS to be a market leader as home delivery takes online shopping from niche to mainstream,” it adds.
Success this time around for Borders would surely alleviate some of the sting that may remain from Webvan’s collapse. But it won’t come easy. After all, while shoppers’ appetite for grocery delivery seems to be growing, the competition seems fiercer than ever.