It finally happened. Webvan, the on-line grocer, declared bankruptcy last month. Now this didn't exactly catch people by surprise. Webvan had been keeping people up to date on the scale of it financial losses. Something over $800 million at last count.

Which brings up the question – what does the failure of Webvan or dot coms in general really mean?

When Amazon laid off people and closed some warehouses earlier this year, one analyst thought it meant that B2C e-commerce was dead. He said that if Amazon, the strongest of the dot coms, was having this much trouble then all others were obviously doomed. And to think, that was the conclusion when Amazon didn't even fail!

A couple of days after Webvan's announcement, a column in the Boston Globe tried to find meaning in all this when it proclaimed – Net findings: Travel works, groceries don't. The story went on to explain that the Web is much more conducive to on-line sales of airline seats and hotel rooms than Fruit Loops and Kraft macaroni and cheese.

Since most all grocery delivery companies have failed, the column's assessment has a strong ring of truth. But what's the broader meaning? There ought to be something more substantive to say after all the late nights, dreams, and money that went into Webvan and other failed dot coms.

As it turns out, Jack Welch of GE recently offered this view, "The American economy will be built on the ashes of the dot com failures." Now, we're onto something. At least it has the right scale to it.

That comment was used to set the stage for the June Exchange conference on (e)Business Transformation. The show's sponsor, DiamondCluster International, said, "We side with Jack Welch, who believes that the innovations attempted over the last few years provide enormous opportunities for corporations that are aggressive enough to take advantage of the lessons that have been provided."

That's certainly true when talking about dot com materials handling. In these pages, we have covered many on-line fulfillment operations. Some were or are more successful than others. But each was clearly a step toward a better understanding of what worked and what didn't. After all, it's a long way from pallets in/ pallets out to pallets in/eaches out.

Unfortunately, this is lost on some people such as Harvard Business School professor Rosabeth Moss Kanter. In that same Boston Globe article, she called Webvan a logistics company whose only innovation was to replace phone and fax orders with e-mail. Obviously she overlooked how Webvan filled those e-mail orders.

From its huge banks of horizontal carousels to its advanced warehouse execution software, Webvan clearly innovated on the order fulfillment side. The fact that the company could not bring in enough orders at the right price before the money ran out is not an indictment of its materials handling and logistics strategies and operations.

It will be interesting to see what happens to Webvan's distribution centers. Will another dot com move in? Will the technology components get broken up and reused in pieces elsewhere? In the end, it's all part of the building process that Welch was talking about. And that's what dot com failures are all about.