Tesco's online sales soar to nearly £1bn

Online sales now make up three percent of the company's total UK sales, and are continuing to grow at 25 percent a year

Online sales at Tesco have rocketed to almost £1bn, helping the supermarket chain post record annual profits of £2.25bn this week.

Sales at tesco.com grew by 31.9 percent year-over-year to almost £1bn, and now account for three percent of the company's total UK sales, while online profit also increased by 54.9 percent to £56.2m. All figures are for the financial year ended 31 March 2006.

Tesco's online food business now has more than 750,000 regular customers and takes more than 200,000 orders per week. The company recently opened a dedicated tesco.com warehouse in the southeast to cope with customer demand.

Sir Terry Leahy, chief executive of Tesco, said: "We did nearly £1bn of business in our dot-com business last year. We are by far the largest in the world in our sector. It's profitable and it's rapidly growing — this is something like the fifth or sixth year in a row where our sales growth has been over 25 percent."

Tesco is also planning to ramp up its online non-food business, selling items such as electrical goods.

Leahy said: "We want to do more on non-food and we're investing more in terms of people and systems and capacity to have a really strong non-food business on the Internet."

Tesco's telecoms business, which launched in 2003, is also booming both on the product and service side, and has more than 1.5 million customers.

Tesco said it has also introduced new technology to help manage stock in stores and increase the availability of products for customers. One example is using handheld computers to scan gaps on shelves, which according to Tesco has significantly reduced out-of-stock items and cut costs.