Webvan delivers charge for small orders

The online grocer says it will begin charging a delivery fee of $4.95 on all orders less than $75.

Online grocer Webvan said it will begin charging a delivery fee of $4.95 on all orders less than $75.

The Foster City, Calif.-based company, in a letter sent to customers, said it will begin charging the fee on orders placed on or after Nov. 13. Orders of more than $75 will continue to receive free delivery.

The move comes on the heels of other changes at the once red-hot upstart. Just two months ago, Webvan laid off 50 workers as part of its recent acquisition of rival HomeGrocer.com. The company's founder, Louis Borders, also recently stepped down from his post as chairman.

Webvan, along with competitors including Peapod and NetGrocer, has been faced with a series of challenges to expand its operations, fine-tune its business model and achieve profit goals.

The company, which sells drugstore items, household products and electronics as well as groceries, said in the letter that orders placed prior to Nov. 13 for delivery after that date will require a minimum of $50 for free delivery.

Despite some tough times and shares that have taken a beating on Wall Street, Webvan continues to expand in new markets, including Atlanta, Chicago and Sacramento, Calif.