The Product Development Model

1. WEBVAN’S FAILURE

In essence, entrepreneurial logic of Webvan concentrates on entrepreneurs rather than customers. This kind of entrepreneurship often begins with the ingenious conception of talented entrepreneurs, who take it for granted that the entrepreneurial environment is highly maneuverable, in which a variety of startup parameters are highly positive and the future can be predicted and analyzed exactly. Besides, most of the requirements of users are well known and the solution is apparent. To draw an analogy, during the process of entrepreneurship, all the work of the startup team is to make plans and force execution and optimization constantly as the starting point and ending point as well as the track is fixed. During the development, Webvan ignored to carry out the validation of the business model and make adjustments based on market feedback. It was too late to mend when they realized that the business plan was far from expectations.

Webvan held the view that the products developed according to the product development model were bound to gain the popularity among customers, who would definitely use or place an order with an access to the products, which caused Webvan to establish a $40 million distribution center based on assumed customer demand before the first delivery. It was envisaged that the first delivery would bring the daily order of 8,000. However, it turned out that there was only 2,000 orders every day. Worse still, 2000 orders were almost all repeating orders from regular users, indicating that there were hardly any new users except those testers. By this time, Webvan did nothing to make the analysis of the problem encountered and adjust their original assumptions in time. Soon afterwards, Webvan insisted on the assumption and entered into an agreement worth one hundred of millions of dollars with a construction company, which planned to establish 26 large-scale centers for warehousing and distribution in the following three years.

Due to the lack of verification and adjustments, such a plan for business