Louis Borders loves to sing the virtues of his company, Webvan. So much so that it got him in trouble with the Securities & Exchange Commission last month. Mr. Border's Internet grocery service was ordered to remain really quiet during its pre-IPO quiet period after word got out about prospective company finances.
The SEC reprimand isn't apt to put a damper on Mr. Borders and his latest venture, though. A math whiz who did graduate studies at the Massachusetts Institute of Technology, Mr. Borders is a systems guru who has set out to crack the biggest real world difficulty in cyberspace: delivery of goods purchased through e-commerce.
ENVY OF THE INDUSTRY
Mr. Borders started out when he and his brother took an Ann Arbor, Mich., bookstore and developed it into what today is Borders Books & Music. Not only was the concept of the bookstore interesting and successful--more books, relaxed atmosphere, knowledgeable salesclerks--but Mr. Borders, CEO from 1971 to 1983, built a computer system for book orders and inventory that became the envy of the industry.
He later founded an investment company, but his next big move came in 1998 when he set out to become the milkman of the cyber generation, bringing the convenience of home delivery to consumers who individually each year schlep some $720 billion in dairy and other products from the grocery store to the kitchen.
Mr. Borders has developed a distribution system in which packers load groceries onto conveyor belts. Deliveries are made within a 30-minute window selected by the consumer. Already with $395 million in backing, Webvan plans to use the money from its upcoming IPO to fund new Bechtel Group-built warehouses in 26 markets over the next two years, starting with Atlanta early next year.
$100 MILLION AD SPEND
Systems aside, Mr. Borders also has begun to show his marketing prowess. Although the venture launched in San Francisco with limited marketing, specifically a few local newspaper and radio ads, Webvan has given itself a strong real-world presence that may turn into the envy of bricks-and-mortar supermarkets. Its specially designed vans, with separate storage boxes for frozen and refrigerated items, transverse neighborhood streets day, night and weekends, making deliveries and showing off the company logo: a giant computer arrow on the rear door.
For a nice marketing touch, Webvan is adding holiday cheer to its delivery vehicles. At Halloween, for example, a playful ghost was added to the logo, along with the word "Boo." Plans calls for a Christmas window dressing as well.
The fourth quarter will mark Webvan's biggest marketing push to date, when advertising is expected from its recently hired ad agency, Publicis & Hal Riney, San Francisco. Spending is expected to reach an estimated $100 million.
Copyright November 1999, Crain Communications Inc.