Although it has spent nearly $35 million in major renovations to an existing warehouse on 91st Street in North Bergen to build its Northeast headquarters, officials for the California-based Internet grocery conglomerate Webvan have decided to put the plans to open there “indefinitely” on hold in order to concentrate on operations in its existing markets.
According to Webvan spokesman Bud Grebey, startup operations at the company’s North Bergen site have been pushed back to “the second half of 2001 and maybe later,” and the plans are current “indefinitely on hold.”
Webvan had initially planned to open its North Bergen headquarters sometime before the summer. The proposed headquarters, located at the foot of 91st Street off of Tonnelle Avenue, was leased by Webvan from Hartz Mountain Industries, Inc. last year. Major renovations have already been made to the facility in order to house the Webvan headquarters.
Grebey also said that the plans were being delayed because the company needed to focus on his operations in existing markets like California, Georgia, Illinois, Oregon and Washington state before it could commit to beginning to venture into the local market.
“We’re carrying more than $200 million in capital which we needed to fund our existing markets,” Grebey said. “Once we can determine that those areas are generating a positive cash flow, then we can move forward with our plans to open the New Jersey distribution center and office site. Right now, I can’t speculate as to when that’s going to happen. It’s a temporary delay, but there is no time frame.”
Webvan offers consumers the opportunity to purchase most items that can be purchased at supermarkets from their personal computers, as well as having the items delivered within 24 hours.
Like many other online Internet companies, Webvan’s popularity skyrocketed throughout 1999 and into last year, when it became the most readily used Internet company for online grocery purchases in the nation.
However, the novelty of the “.com” companies has waned in the past six months with several major shop-at-home Internet firms, such as Pets.com and BestToys.com, filing for bankruptcy and ceasing operations.
According to township administrator Joseph Auriemma, that trend doesn’t seem to be plaguing Webvan at the moment.
“They apparently were doing fine,” Auriemma said. “They recently received $175 million when their IPO (Initial Public Offering) was listed on the market. I believe that’s the money they used to do the renovations to the warehouse. I understand that some other Internet firms have gone out of business. All we can do is hope that this is not the case here.”
Grebey said that the company listed total revenues for 2000 at $259 million.
Auriemma said that he had a meeting with Webvan officials last week, when they were seeking to receive the $1 million in Urban Enterprise Zone funds that were allocated when the Webvan project was first announced in February of 2000.
“But we’re not going to give them the UEZ funds until we’re sure that they’re running a viable business,” Auriemma said. “Part of the reason why we agreed to giving them the UEZ funds was predicated on Webvan providing jobs to our residents. We cannot supply the funds until the jobs are created. Right now, there’s no viable business there.”
When the plan was announced last year, Webvan officials believed that the North Bergen headquarters would have created 900 new jobs, with North Bergen residents getting the first crack at the positions.
In speaking with the Webvan officials, Auriemma believed that it was a temporary setback and not a permanent one.
“I think they still want to come here,” Auriemma said. “They just spent $34 million in making major renovations to that building. They completely re-did the entire building to fit their needs and made additions as well. From what they tell us, they just want to make sure that their holdings in the Northwest and California are still profitable and then they’re coming here.”
Added Auriemma, “That’s what they’re telling us. I can’t begin to project when that can happen, but I would have to believe it would be later than the second half of 2001. I’d be skeptical about anything being done this year. It would more than likely be the first half of 2002, but I really don’t know.”
Mayor Nicholas Sacco believed it was a “temporary setback.”
“I think they’ve invested way too much money to walk away,” Sacco said. “I think Webvan will be here, but just not as soon as we had hoped to.”
When the township agreed to the deal with Webvan last year, a portion of its UEZ funds, some $300,000, was set aside to make major improvements to the area. The improvements included milling and paving the road, adding new sidewalks and curbs and elevating the entire road to eliminate flooding problems that existed. According to Auriemma, nothing will prohibit the road improvements from continuing. The work is scheduled to begin in April and will be completed within two months.
“Until someone tells me differently, I believe that Webvan will still be coming to North Bergen,” Auriemma said. “Especially with that level of investment in that building. The improvement has already been made to the site and Hartz still owns the site. At the very least, we’re getting much needed improvements to the roads and the property value will be upgraded with the improvements.”