June 4, 2001 1:45 PM PDT

Webvan plans same-day service in Seattle

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Ailing Webvan has started a limited same-day delivery service for its top customers in Seattle, the company announced Monday.

The move comes two months after the online grocer experimented with the service in Atlanta--weeks before shuttering its entire operation there.

The service is available to platinum- or gold-status members, customers who spend and shop the most frequently, Webvan said in a statement. Customers must also order before noon to receive goods during the 5 p.m. to 9:30 p.m. delivery time.

The company said it is considering expanding into its other markets with the same-day service, an idea made famous by Kozmo, the defunct online convenience store that made headlines for one-hour delivery of CDs, videos and snack food.

Same-day delivery, however, was not a magical pill for Kozmo, which shut its doors in April, or for Urbanfetch, which pulled the plug on its retail business late last year.

At this point, Webvan is under pressure to try anything that may reverse its course.

The Web's largest grocer, valued at $8.54 billion at its November 1999 initial public offering, saw its high-profile CEO resign in April, faces delisting from the Nasdaq, and may run into a cash crunch sometime next year.

A year ago, the company planned on opening in 26 cities. But last month, Webvan began scaling back. This year, it has ceased operations in Dallas, Atlanta and Sacramento, Calif.

Offering same-day delivery might help lessen the worry that many customers have when they order from Webvan: planning ahead.

Former Webvan executives have said that one of the greatest hurdles the company has fought to overcome is that consumes don't want to order groceries days before they actually need them. Webvan's normal ordering procedure forces customers to order several days before the company can deliver.

"A number of our customers requested this service," Greg Kinney, general manager for Webvan-Pacific Northwest, said in a statement. "We determined a cost-effective way to bring this convenience to our customers."


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