Success and failure of pure‐play organizations: Webvan versus Peapod, a comparative analysis

Abstract

PurposeThe purpose of this study is a comparative analysis of two electronic grocers, one success and one failure, in order to attempt to identify the critical success factors that contributed to their different performances.Design/methodology/approachFour aspects of each company's operations are explored and compared in this side‐by‐side case study. The foci of this study are strategic management, logistical infrastructure, information technology deployments, and marketing strategies.FindingsThe success of Peapod was the result, in general, of application of good strategy and knowledge about the opportunities provided in e‐commerce. Webvan's failure, in general, was attributable to the design of its logistics system, the misunderstanding of the capabilities of information technology, and ineffective marketing.Research limitations/implicationsThis study investigates only two online grocers, and the lessons learned in this comparative case study may not be applicable to other types of online business.Practical implicationsThis paper provides insights into successful retail e‐commerce operations through the comparison of successful and unsuccessful firms in a specific business. From the analysis, businesses and individuals who are considering the future of e‐commerce for their enterprise should better understand the factors that contribute to success and failure in a pure‐play environment.Originality/valueSeveral studies have investigated how internet businesses function, and how the customers of online businesses differ from traditional business customers. Some studies have offered comparisons of differing levels of performance within a specific e‐business; however, this report investigates the reasons for the success and failure through its comparative analysis of specific managerial activities.