Compass Points: Edsel Award

Compass Points - Edsel Award

Edsel Award Compass Points takes the opportunity to poke fun at companies whose strategies are too complicated to understand, impossible to implement, or just plain dumb ideas that belong on the scrap heap of history!

WEBVAN: The Billion Dollar Beta Test

Do you remember Webvan, the dot com that was going to revolutionize the grocery business? Well it is now just a memory. Interesting concept. Happy customers, but not enough of them.

Webvan made gigantic mistakes, any of which would have sunk the company alone. They seem to have believed that their new business model would be completely right the first time. They did not leave room for fine-tuning. They placed a billion dollar bet, rolled the dice once, and came up losers.

Webvan rolled out its model in many major markets around the United States before it had been validated and achieved profitability anywhere. They scaled up before they knew whether they were scaling up the right thing.

An unforeseen problem: consumers did not switch from existing channels as fast as their rapid scaling up required and Webvan ran out of money. Too bad, because they had happy customers, great quality food and a good selection. A website you could easily navigate. On-time delivery and courteous employees. They had the potential to survive.

To do so, though, Webvan needed to treat their deployment as a Beta test - you know, try things out, fine tune, and so on - one geographic market at a time. Instead they took a giant leap. Whoosh, splat. Bad execution and a flawed strategy torched a billion dollars and failed to deliver on an interesting concept. All in all, a worthy recipient for our “Edsel” award!

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