Beyond Webvan: MyWebGrocer Turns Supermarkets Virtual

When the Tarrant brothers—Rich, Brian, and Jerry—founded MyWebGrocer in 1999, they didn’t follow the path of Webvan and others betting on the online grocery gold rush. “Webvan was a poster child for a bad Internet business model,” says MyWebGrocer’s chief executive officer, Rich Tarrant. “In a low-margin business, where the products can be purchased within three miles by anyone in the United States, they decided to build warehouses and a whole distribution system with delivery trucks, labor, and everything else. But the 36,000 conveniently located grocery stores on every Main Street in America already had all that.”

In one of the biggest flops of the dot-com era, Webvan went bust less than two years after its $375 million initial public offering in 1999. By focusing on building software rather than physical infrastructure for the $550 billion U.S. grocery industry, MyWebGrocer, based near Burlington, Vt., became the industry’s leading provider of digital services. (What did a famous Vermonter write about taking the road less traveled?)