RSM370H1 Lecture Notes - Lecture 12: Webvan, Fixed Cost, Variable Cost
Document Summary
December 5, 2018: webvan was the most catastrophic start up failure, started during the dot com bubble, tried to sell groceries online, selling groceries online is difficult, delivery costs are sensitive to amount of sales. Need to make frequent deliveries to customer homes. Can webvan model earn a return: webvan is trading the cost of running a store for the cost of delivery, considerations: Do people prefer to have stuff delivered. Will people pay a premium for delivery. Will manufacturer pay to buy the info on individual consumer purchase history: can earn profit by selling this info. Elderly: time pressured, people who place large food orders regularly. Need to target these people because of fixed delivery cost: need large order size for economies of scale. Elements of delivery models: unattended delivery home during delivery, small delivery window. Customer has a lockbox, delivery person can leave groceries in lockbox if customer not: fixed monthly fee.
