Webvan changes delivery fees, starts loyalty program
After breaking even in the Los Angeles area market, online grocer Webvan.com has
made changes in the delivery structure for its San Francisco and Chicago markets to ensure profitability for 2002 as projected in its first quarter report.
The new delivery prices are:
--Free for deliveries that total $100 or more.
--$4.95 for deliveries of $75 to $100
--$9.95 for deliveries of less than $75.
Previously, customers in those markets paid $4.95 for orders of $75 or less
and delivery was free for orders of $75 or more.
Webvan Monday sent an e-mail message to customers encouraging them to utilize Webvan’s various categories and make purchases of more than $100 to help Webvan become profitable. “By selecting drugstore, pet, household and baby products as well as groceries and fresh-market items, our most profitable customers place orders of $100 or more each week,” wrote newly appointed CEO Bob Swan. “While we realize that not all households and businesses have the same needs, we believe that most of our customers will find it easy to do all of their weekly shopping from Webvan’s wide and growing selection.”
Webvan’s average order size is $114. Webvan wants to make its delivery structure economic for its customers while also catering to that target customer base that spends more than $100 per order. The move also puts the San Francisco and Chicago markets in line with Webvan’s acquired Homegrocer.com markets, which already had a $9.95 delivery rate in place.
Webvan also quietly started a rewards program in April in all seven markets it serves--San Francisco, Chicago, Orange Country, Ca., Portland, Ore., Los Angeles, San Diego and Seattle—to encourage loyalty and greater spending. Customers earn one point for every dollar they spend at Webvan. The loyalty program is retroactive and will reward customers for their shopping since January.
The rewards program has gold and platinum levels. Customers get 100 bonus points for spending $100 or more per order and get free delivery on minimum orders of $25 when they reach 1,500 points. The program also allows customers to pre-select delivery times and take advantage of special delivery times offered only to rewards customers. Customers in the program also can receive surprise gifts based on their purchase history and have an exclusive customer service number. Webvan’s current active customer base is 761,000.
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