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The 21st Century Milkman


Business Week e.biz -- Web Smart 50 -- Logistics

The 21st Century Milkman

Dawn Arnold is a picker for Internet grocer Webvan Group Inc.. Her job: To assemble customer orders from about 4,000 products that rotate on giant carousels. Within minutes, Arnold can pluck everything from aspirin to relish for 16 orders simultaneously. What's more, she doesn't need some crumpled-up grocery list to know what to select. Webvan's computer system tells her exactly what to do.

It's a logistical wonder that no other online grocer, let alone a supermarket chain, has yet approached. The company has combined the Web with old-fashioned delivery knowhow borrowed from FedEx Corp. to revive the beloved milkman of yesteryear--and then some. The result is the delivery of perishable and dry goods to customers' homes within a 30-minute window chosen by the customer. "Building this capability was no small feat," boasts Webvan CEO George T. Shaheen.

At the heart of Webvan's gameplan are sleek, 30,000-square-meter distribution centers, which serve the same number of customers as 18 grocery stores. The centers contain 7 km of conveyor belts and temperature-sensitive rooms for products such as ice cream. Totes carrying customer orders travel along the conveyor belts to wherever selected products reside. Once an order is complete, it is loaded into a refrigerated truck, taken to stations throughout a city, and delivered to the customer. Webvan has more than Wheaties in its sights: It also wants to offer other services, such as dry cleaning. But that will present new challenges--like how to keep dirty clothes separate from food items. Now, that's one for the logistical wonder.By Linda HimelsteinReturn to top

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Webvan Group

George Shaheen, CEOThe Project: To coordinate home delivery of everything from lobsters to dry cleaning.The Payoff: Expects operating margins five percentage points above the grocery-industry average. Its first warehouse is projected to turn profitable this quarter.Return to top


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