www.eastbayexpress.com/issues/2001-05-25/feature.html/page1.html
Metro Desk 30 Sickness and Wealth Highland Hospital explores the complex ethical questions surrounding support groups for HIV positive patients 7 Days 31 Regents Reverse; Bob Bobb's Still Plotting Vegas-by-the-Bay Press accounts say Jane Fonda was never the same after a stay in the East Bay. Letters 32 Letters to the Editor Week of may 25, 2001 The Webvan distribution center in East Oakland is a technological wonderland, even if it is entirely devoted to the prosaic mechanics of grocery distribution. The huge warehouse is a sci-fi workplace where the employees wear bar-code scanners on their fingertips and miniature wrist computers that tell them what to do, where the software driving the machinery is so prescient that it makes sure the potato chips get packed on top of the six-pack of Coke, instead of underneath. It is also the nerve center of Webvan's Bay Area hub-and-spoke routing system, designed to time deliveries so precisely that your order gets to your house with the ice cream still frozen and the tomatoes unblemished. The Webvan warehouse is a totally digitized, super-refrigerated behemoth, capable of replacing eighteen traditional grocery stores and packing goods to be shuttled to online shoppers all around the Bay Area. The future is so very now at the Webvan warehouse, which was designed to forever change the way we shop for groceries and the way retailers deliver them to us. I've been itching to get inside the Oakland Webvan distribution center--or DC, in Webvanspeak--since the company opened it with great fanfare in June 1999. In those heady days of Internet business speculation, when bigger was better and much, much bigger was much, much better, Webvan had well-publicized plans to roll out identical facilities in 26 cities nationwide. There was talk of online grocers capturing a hefty slice of the $500 billion the nation's shoppers spend annually on groceries. If Internet commerce caught on, pundits mused anxiously (or eagerly, depending), it might put traditional "bricks-and-mortar" grocery stores right out of business. Opening the Foster City-based company's first distribution center in East Oakland--near a ready supply of blue-collar labor and an affluent, computer-friendly and food-obsessed consumer market--had seemed like a particularly ingenious move for the new company. But perhaps because they were shielding the proprietary software that runs the conveyor belts, or perhaps because they were leery of the e-tailing competition that was out there at the time, the PR team Webvan was then employing guarded entry to the distribution center with a vigilance worthy of a facility that was warehousing alien spacecraft, rather than bulk foods. For me, the promised trip to the new center never panned out, and neither did the ride in the refrigerated delivery van, nor the much less exciting substitute offer: a chance to watch a Webvan driver hand off groceries to a real live customer. Several minutes before deadline, I caved in and accepted Webvan's final offer, which was a phone interview with a satisfied customer. The satisfied customer had many enthusiastic things to say about the new brush for his barbecue pit that he had purchased via the Web site, but it all seemed anticlimactic. As it turned out, e-commerce as a whole was about to become pretty darn underwhelming. What a difference two years made, to Webvan as it did to hundreds of other Internet businesses. By the end of this April, an estimated 17,554 workers nationwide had been handed pink slips due to the dot-com bomb; It was only during the first quarter of this year that Webvan finally turned a profit at its Orange County facility; Webvan stock, once trading at $34 per share, now hovers somewhere between nine and twenty cents. In April, after the stock's value had remained below one dollar for several months, the powers that be at the Nasdaq warned Webvan that they would be delisted if they couldn't bring up the share price. In a last-ditch move to drive up the stock's value--a move regarded by financial analysts as analogous to the futile flailing of a drowning person coming up for air one last time--Webvan proposed a 25-for-one reverse stock split. Worse for the company's flagging morale, key personnel have started leaving. The first to go was Louis Borders, founder of the Borders bookstore chain, who originated the Webvan idea and helped bankroll the company's startup. Borders stepped down as chairman last fall, then resigned from the board of Webvan Group, Inc. Less than two years ago, Webvan had flamboyantly recruited him away from a $4 million a year gig at Anderson Consulting with nothing more than the promise of a measly $500,000 annual salary--and lots and lots of Webvan stock. When Shaheen left, the value of those options had shrunk to about $150,000; Industry analysts have speculated that the departure of two of the company's most visible personalities might hobble its ability to raise more capital--and Webvan estimates it will need another $25 million to make it through the first quarter of 2002. In an effort to conserve capital, Webvan recently closed its facilities in Atlanta and Dallas as well as a substation in Sacramento. In April, cutbacks necessitated the layoff of 885 more--about half of them from the Foster City administrative office. The company said it was merely "right-sizing" the business. The Webvan executives who remain insist their business formula will still work, and that the company's recent travails have more to do with outside factors--the dip in the economy, the current skittishness of investors, and the sluggishness of consumers to warm up to online shopping--than with flaws in Webvan's model. Webvan's model can and will turn a profit, she says, but they have to start over on a smaller scale. Meanwhile, even if you were one of the many people who were secretly relieved that the Internet bubble burst, you should be pulling for Webvan. Unlike other dot-coms, bankruptcy for Webvan doesn't just mean pink slips for techies and administrators--Webvan employs hundreds of truck drivers, warehouse workers, meat cutters, and other manual laborers, many of them recruited from the Oakland neighborhoods that surround the Webvan DC. These were the very people whom the political left fretted might be left out of the Bay Area's tech boom--the people for whom the economic surge of the last two years mostly meant rising rents and gentrification. This is a place where the wealth is actually beginning to trickle down. As for me, I just wanted to get into the DC, which in my imagination was not unlike the Willy Wonka Chocolate Factory.
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