The Last Mile 

When the Internet grocer Webvan opened a distribution center in East Oakland, it seemed that some of the area's e-commerce riches were beginning to trickle down to street level. Now, employees wonder if the salad days are over.

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The Webvan executives who remain insist their business formula will still work, and that the company's recent travails have more to do with outside factors--the dip in the economy, the current skittishness of investors, and the sluggishness of consumers to warm up to online shopping--than with flaws in Webvan's model. "We've always had a business plan and a path to profitability, whereas the majority of Internet companies just slapped [a plan] together, raised tons of money and said, 'Don't worry about it, that'll come later,'" says spokesperson Amy Nobile, a member of Webvan's new PR team. Webvan's model can and will turn a profit, she says, but they have to start over on a smaller scale. "When the Internet started to boom, the priority [for venture capitalists] was, 'Show us you have a national plan, show us you can scale this and be a national player.' Having that national footprint and the plan to move into 26 cities was a big seller," she says. "Over time, obviously, priorities kind of shifted and the new demand was that you have to prove the model works, first, and then expand later."

Industry experts point to Webvan as well as fellow money-loser Amazon.com as the true litmus tests of whether or not e-commerce can succeed at all. (Amazon is the nation's largest online retailer; Webvan is the second largest.) Both of these companies are online mega-marts that expect to finally achieve profitability due to the sheer volume and variety of goods they offer. Now that the more narrowly defined e-merchants--the Wine.coms and the Pets.coms of the world -- have imploded, they say, there are few online competitors left to take on the likes of Webvan, which you can now use to buy anything from vegetables to books to beauty products to consumer electronics, not to mention wine and pet food.

Meanwhile, even if you were one of the many people who were secretly relieved that the Internet bubble burst, you should be pulling for Webvan. Unlike other dot-coms, bankruptcy for Webvan doesn't just mean pink slips for techies and administrators--Webvan employs hundreds of truck drivers, warehouse workers, meat cutters, and other manual laborers, many of them recruited from the Oakland neighborhoods that surround the Webvan DC. These were the very people whom the political left fretted might be left out of the Bay Area's tech boom--the people for whom the economic surge of the last two years mostly meant rising rents and gentrification. This is a place where the wealth is actually beginning to trickle down.

As for me, I just wanted to get into the DC, which in my imagination was not unlike the Willy Wonka Chocolate Factory. "Reporters often ask that," muses Nobile when I try to delicately raise the Wonka question. She is nice about it, but she points out, very firmly, "There is no chocolate pond." Nevertheless, it did not disappoint.

The Oakland distribution center is a squat, gray concrete building just a few blocks away from the Coliseum, and if you want to really see it in action, you have to get there well before 6:00 a.m., when most of the day's orders are being packed for delivery and the joint is truly hopping. You should bring a parka, because the warehouse is cold. You should also be prepared to shout, because the interior reverberates with a constant rushing noise, the sound of massive refrigeration at work.

At first blush, the interior of the Webvan DC looks quite a bit like the inside of your neighborhood Costco, with its giant pallets of soft drinks and dog food bags stacked four tiers high near the entryway. What is more striking is the tangle of silver conveyor belt--over four miles of it--that runs around, over, and underneath everything and must be crossed using a series of yellow-painted stairs and catwalks. Along the way, the belt is equipped with photo eyes that read bar codes. Bins of groceries passing by the photo eye are scanned, a mainframe computer figures out which way each one should be going, and they are accordingly nudged this way or that on their journey. Webvan prides itself on being so full automated that humans rarely handle the produce. I am so busy gazing at the interplay of moving parts that general manager Matthew Mahood, who is doing duty as tour guide, has to gently nudge me out of the way of an approaching forklift.

The roller-coaster conveyor belt inside the DC is designed to sort Webvan's merchandise according to its weight, humidity needs, and--most obviously--the temperature at which it must be kept. Ambient, or room-temperature items, are packed into yellow bins and head stage right on the conveyor system; chilled items are packed into green bins and exit stage left towards the refrigerated portion of the building. Freezer items (blue bins) are maintained at a temperature of minus 20 degrees. Workers in this part of the DC wear full-body "freezer suits"--olive-colored padded jumpsuits that reach all the way over the tops of their heads--and work in fifty-minute shifts with warm-up breaks in between. Everyone else gets a Webvan fleece jacket; here and there you can see people with woolen gloves stuffed underneath their sanitary latex ones.

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