The US-based Safeway has no connection with Tesco’s UK rival of
the same name, although they were formerly part of the same
group.
Tesco’s e-tail model is viewed as one of the most successful
e-commerce ventures in the UK. Crucially, unlike some US
supermarkets, it avoided using warehouses to service its e-tail
customers. Instead, it relies on selections from existing store.
The enormous cost of warehousing is seen as unsustainable unless a
large proportion of the target market begins shopping for groceries
on-line. Tesco also charges for delivery, unlike some others.
Tesco currently has over one million registered on-line
customers with annual sales of around £300 million, although this
still represents a tiny fraction of the UK off-line market. It
delivers 70,000 orders per week from 240 UK stores.
Although the US is the world’s largest market for e-tailing, the
market for supermarket e-tailing is smaller than that the UK,
largely dominated by Tesco. Tesco hopes to expand the US market,
and is aiming for profitability from the new GroceryWorks operation
by the end of next year. Tesco is set to continue its internet
expansion by offering on-line supermarket shopping in South Korea
later this year.
