Webvan markets start-up to customers

Summary:The Net grocer, which once stood atop the online grocery sector only to come crashing down last July, is referring former customers to Net delivery company WhyRunOut.com.

One of the last official acts Webvan performs will be to pass the torch to a home delivery start-up.

Webvan, which once stood atop the online grocery sector only to come crashing down last July when it filed for bankruptcy, is referring former customers on the West Coast to Net delivery company WhyRunOut.com.

"As we finally close down at Webvan, we wanted to give our customers the ability to sign up with WhyRunOut.com," said Webvan's e-mail to former customers. WhyRunOut is "a company that can provide the same great products and service you remember from Webvan."

Webvan struck a deal to recommend WhyRunOut's service to customers who live in Los Angeles, Seattle, the San Francisco Bay Area, San Diego and Orange County, Calif., areas, said Dan Frahm, WhyRunOut's chief executive. If customers choose, Webvan will turn over their personal shopping histories and home addresses to WhyRunOut.

Both companies declined to disclose financial terms of the agreement.

Aliso Viejo, Calif.-based WhyRunOut operates only in Southern California but plans to expand sometime next year to some of the same areas Webvan once operated in, Frahm said.

Webvan customers have only until Wednesday to sign up with WhyRunOut. After that, Webvan is scrubbing all customer information from its database and pulling the plug on its servers so it can auction them off, said Webvan spokeswoman Dara Williams. "We have to protect our customers' privacy," she said.

The Net's home delivery sector has seen most of its best-known and best-funded companies sink over the past 18 months. Kozmo, Streamline.com and HomeRuns.com all have gone under.

All that's left to take up the challenge of bridging the Web's so-called last mile--the distance between a retailer and the customer's home--are companies like WhyRunOut.

With far fewer dollars than the almost $1 billion that once bloated Webvan's coffers, these companies frown on the spending of Internet highfliers.

Privately owned WhyRunOut has no intention of paying $35 million for automated warehouses, which is what Webvan paid. The company says it believes that home delivery can be made profitable only through dogged cost control.

Last May, WhyRunOut acquired Los Angeles-based home grocer PDQuick.com--better known as Pink Dot--to fulfill grocery orders in Southern California from six Pink Dot stores. WhyRunOut also transports groceries for Stater Bros. Markets in Orange County.

Ensenda, a same-day delivery company founded by former Webvan executive Chris Mannella, is trying to cut delivery costs by making deals with messenger services around the nation.

When retailers want to offer home delivery to customers, they can contract with Ensenda. The company, which has signed deals with messenger services in several major cities, will direct them first to the store and then to the customer's house. The company's technology tracks the order as well.

"It allows the retailer to fulfill orders from local store inventory, which is already close to the customer," Mannella said. "Ensenda's goal is to satisfy the pent-up demand for immediate delivery."

Topics: Start-Ups, Privacy, Servers

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