Very interesting article from a recent WSJ:
How Webvan Conquers E-Commerce's Last Mile
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A Courier Delivering the Goods
Takes On Hills, Alleys,
Toddlers and Law Students
By George Anders
12/15/1999
The Wall Street Journal
Page B1
(Copyright (c) 1999, Dow Jones & Company, Inc.)
SAN FRANCISCO -- Smiling toddlers call him "grocery man." City drivers aren't so kind; they sometimes curse at his double-parked van. But to his bosses at Webvan Group Inc., there's just one word for Randy Cervantes: indispensable.
Mr. Cervantes is an Internet courier -- a job that's an odd mix of old and new. Each working day, he delivers groceries to the homes of anywhere from 12 to 25 online shoppers. His San Francisco territory includes countless steep hills and skinny alleys and one middle-aged male customer who usually answers the door in his underwear.
This is where the hard work of Internet retailing gets done. It's easy enough to set up a Web site with pretty pictures of merchandise. But someone must deliver those products quickly and reliably enough so that customers will return to buy more. Rather than use traditional shippers, Webvan and a number of other online grocers are trying to conquer the last mile of the Internet shopping cycle by creating their own delivery system.
Webvan already has spent more than $35 million to set up a distribution network in the San Francisco Bay area, including 120 vans and 170 drivers. Its merchandise covers everything from corn flakes to cosmetics. Its ambitions are even bigger. Starting next year, Webvan plans to expand into Atlanta, Chicago, Dallas and more than 20 other U.S. cities.
In Webvan's world, everything is planned with split-second precision. Online customers pick half-hour delivery slots, such as Friday between 4 and 4:30 p.m. If the driver is late, Webvan refunds $3. Route-planning software tries to give each driver a feasible schedule with deliveries planned for every 10 to 30 minutes. Yet even the smartest computer program can't factor in all the quirky moments that befall a driver with a deadline.
Mr. Cervantes, 39 years old, thought he knew the delivery business after more than a decade of driving trucks for FedEx, Frito-Lay and Wonder Bread. But since joining Webvan in February, he has reworked almost every routine. Now, his van is packed with plastic bins holding grocery orders. The cab has reminder notes (such as, Don't bring dry ice into people's homes).
At 2:10 on a recent afternoon, Mr. Cervantes pulls out of Webvan's San Francisco depot and heads for 100 McAllister St., a high-rise dormitory for Hastings College of the Law. This is one of Webvan's best -- and most exasperating -- stops. More than 50 law students there now order groceries online. "We've had days where all you have to do is park at this building and take the elevator up and down for hours," delivering groceries, Mr. Cervantes says.
But mischievous students also exploit Webvan's current policy of free deliveries on any order, no matter how small. Drivers still mutter about one student who ordered a pack of Juicy Fruit gum -- and nothing else. On this afternoon, Mr. Cervantes gets luckier. His student signs for a $40 delivery and starts unpacking beer, bread and potato chips.
Resuming his route, Mr. Cervantes skirts the financial district, relieved he doesn't have a stop there today. Webvan gets plenty of orders from office workers in downtown skyscrapers who use their Internet connections at work to accomplish each evening's shopping. Mr. Cervantes remembers one well-dressed woman shoving steaks into an oversize purse as she headed home. But downtown is full of tow-away zones, Mr. Cervantes warns. "And if your truck gets towed, you've just let everyone else's order get towed, too."
His next stop is in the elegant Pacific Heights neighborhood, and an ominous notation on Mr. Cervantes's schedule says: "Make delivery in back." That involves driving up a steep alley hardly a foot wider than the van. Mr. Cervantes decides to back in and is inching his way up when a blue Mercedes sedan pulls into the same alley, eager to zip into its parking spot. Just as tempers flare, Mr. Cervantes finds an outlet road where he can park out of harm's way.
The struggle is worth it. The Pacific Heights customer is a family of four doing a month's shopping. Mr. Cervantes unloads 14 big plastic boxes, or "totes," containing vast amounts of apple juice, napkins, chicken soup and other staples. He stops to give the children Webvan magnets. ("It's good marketing," he says later.) After eight minutes of brisk unloading, he gets a signature for the $412 delivery and is on his way.
Jumbo orders like that one are Webvan's great hope. As of Sept. 30, Webvan's average order size was $72 -- too small to absorb the costs of home delivery. For the first nine months of 1999, in fact, Webvan had a $95 million loss on revenue of just $4.2 million. But Webvan's chief executive, George Shaheen, thinks the company can achieve the break-even point, in terms of cash flow, in each major market after a year or so, as it absorbs start-up costs, builds a denser delivery network and gets customers to order more. This quarter, Web-van officials say, average order size is climbing, but they won't elaborate.
For the first part of his shift, Mr. Cervantes needs to make only one delivery every half hour, letting him dawdle between stops. By 4 p.m., the pace picks up. Now he must do two deliveries per half-hour, a rate much more in line with the company's long-term goals.
At 4:24 p.m., Mr. Cervantes is still a dozen blocks away from a customer expecting delivery by 4:30 p.m. "We've got just enough time," he says tensely as he rolls through a stop sign. He reaches the customer's block, double-parks and unloads three big totes. Unable to carry them all at once, he lugs two up a flight of stairs, leaving the third unattended for a brief time on the street. "That's not quite the way I like to do it," he says, as he rings the doorbell. But when he looks at his watch, he smiles. It's 4:29 p.m. -- and he just made the deadline.
As recently as June, 12% of Webvan's deliveries were late. But the company says that rate now is down to just 2%. At Mr. Cervantes's San Francisco station, drivers once went for a month without any late orders. "We called it the Streak," Mr. Cervantes says. It became such a point of pride that when one driver radioed to his dispatcher to say he was starting to be delayed, six other Webvan vans swooped over to help him.
Webvan officials now say that only a natural disaster could scramble their schedules. A close call came last week, when the Bay Bridge, connecting San Francisco and Oakland, Calif., was impassable for six hours because a truck containing portable toilets overturned and spilled its cargo across three lanes of traffic. The company warned some customers of likely delays, "but in the end we got everything out on time," says Patrick Graham, manager of the San Francisco depot.
Mr. Cervantes's evening runs are mostly to third-story walk-up apartments, where customers are glad to see him lugging their milk and soda up the stairs. His manner is courteous and bland -- a deliberate attitude, he later explains. "We're told never to comment about the way a customer's house looks," he says. "Even if it's gorgeous. It just makes people feel uneasy."
New recruits get a week of classroom training. In a role-playing exercise last Friday, Lalita Beutler, a one-time corrections officer, pretended to make a delivery to a stay-at-home dad. All went well until she discovered she was missing three of the four pints of Ben & Jerry's ice cream her "customer" had ordered.
"I'm having an ice-cream party for my kids tonight," the dad said. "There won't be enough to go around."
"I'm sorry," Ms. Beutler replied. "There's nothing I can do."
Wrong answer. Within seconds, her bosses coached her on how such hard-luck stories could be turned to Webvan's advantage. Wipe away any charges for the ice cream. Call Webvan's central office and see if another driver can track down the missing flavors and bring them over. "Do whatever it takes," said Dennis MacPherson, a Webvan manager.
So far, Webvan says, it hasn't had much trouble recruiting or keeping couriers. Pay of about $14 an hour is in line with industry averages, but Webvan also offers free meals and stock options. Many couriers have shipping-industry backgrounds, but Webvan also has hired former social workers and hairdressers.
Good people skills are crucial, says Mr. Shaheen, the Webvan CEO. "Couriers are our ambassadors of reliability," he says, "and they can be our saving grace if there are problems." |
