Asda embraces Tesco's approach to e-commerce

Supermarkets have found that it makes more sense to serve online customers by using their existing stores, rather than by building new depots
Written by Graeme Wearden, Contributor

UK supermarket chain Asda is planning to follow Tesco's lead by fulfilling all its Internet orders through its existing stores, rather than by operating dedicated warehouses for its online shoppers.

According to The Independent, Asda is to close two depots in the south-east of England that are currently used just to meet orders placed online. It then plans to use its existing supermarkets to satisfy all its online orders -- a model that has already been successful for rival firm Tesco.

The two sites -- at Watford and Croydon -- were set up in 1999 and have been dedicated to servicing online customers. Asda took this step because it felt that it did not have enough existing supermarket stores in the south-east of England to cope with additional demand from Internet shoppers.

Online orders placed by Asda customers in the rest of the UK are already filled at local stores -- employees travel round the aisles collecting the required products. The closure of the Watford and Croydon depots will mean that Asda will no longer support both models of e-commerce fulfillment.

The success of Tesco Direct is widely seen as confirmation that high street retailers can succeed in the e-commerce world by using their existing infrastructure to serve online customers. It began an online ordering service in 1996, and has always assembled online orders directly in local supermarkets, rather from dedicated depots.

In contrast, US dot-com Webvan -- which spend large sums of money constructing its own warehouses -- shut down and filed for bankruptcy last summer.

Tesco recently announced a deal with US giant Safeway to begin joint operations in America.

Asda is hoping that the closure of the two depots -- which should not involve any job losses -- will help it to boost its e-commerce offering. According to The Independent, Asda hopes to offer online ordering to 14 million households by the end of 2002 -- compared to 8.4 million currently.

E-commerce is transforming business around the globe. Get the latest headlines at ZDNet UK's E-commerce News Section.

Have your say instantly, and see what others have said. Click on the TalkBack button and go to the ZDNet news forum.

Let the editors know what you think in the Mailroom. And read other letters.

Editorial standards