Sputtering Webvan Begins Ad Campaign

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On the heels of recent layoffs and stock price woes, Webvan yesterday began running a national TV/radio campaign.


Webvan spokeswoman Amy Nobile said her firm was scheduled to run "quirky" TV prime time spots. She said additional TV and radio commercials will follow the spots this month.


Nobile said the ads will run in her company's markets of Atlanta, Chicago, Orange County, CA, Portland, OR, Sacramento, San Diego, San Francisco, Seattle and Los Angeles.


Meanwhile, recent developments at Webvan don't look promising.


The firm's Nasdaq listing appears endangered because the grocer's stock price has fallen far below $1 a share, lingering around 25 cents for the past week. In addition, company founder Louis Borders, who was the firm's No. 1 shareholder, resigned from its board of directors on Feb. 14.


Webvan reported a total net loss of $598.7 million for 2000. While it reportedly has around $212 million in cash, the firm has said it needs at least $40 million more to make it into next year.


The Foster City, CA, company shut down operations in Dallas Feb. 16, killing 220 jobs in the area. Webvan is also delaying plans to enter the New Jersey/New York market in order to preserve capital, though the firm recently completed a $30 million, 348,000-square-foot fulfillment center in North Bergen, NJ.


Webvan's troubles are indicative of the vanishing online stand-alone industry, said Robert Rubin, analyst at Forrester Research, Boston. He said the grocery stand-alones have been unable to generate sales figures to justify staggering fulfillment costs. He said that while there is not any one operational cost that has all-but-sunk the industry, its general fulfillment process is too expensive.


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