In the biggest dotcom failure to date, online grocer Webvan yesterday ceased trading and filed for Chapter 11 bankruptcy protection.
The e-tailer, once among America’s best-funded online companies, has permanently halted operations in all markets, axed 2,000 jobs and is to sell off its assets.
“We’ve made significant progress in reducing our operating losses and burn rate, as well as improving the economics on each order we delivered,” lamented ceo Robert Swan. “However, our order volume declined considerably during the second quarter ended June 30, accelerating our need for capital.”
Webvan haemorrhaged cash by building expensive warehouses, with concomitantly huge operating costs, its problems exacerbated by increasing competition from bricks-and-mortar retailers such as Wal-Mart.
For several months the stricken company sought extra funds to survive [WAMN: 04-Apr-01], but most investors refused to touch it in the current climate. Valued at $8 billion following its flotation in 1999, the firm more recently saw its plunging stock risk delisting by Nasdaq.
News source: Financial Times; The Times (London)