UK grocer takes Safeway to the Net

Tesco has created a Web site for the US Safeway supermarket chain, which, according to reports, looks almost identical to Tesco's UK Web site. The project will kick off at five Safeway stores in Portland, Ore., on Monday, and is expected to debut across the Safeway chain in the coming months.

Tesco is hoping that its business model will prove successful in the United States, which has already seen the high-profile collapse of Webvan--a dot-com retailer that spent more than $1.15 billion in a failed attempt to succeed in the highly competitive grocery market.

Tesco's business model is radically different than Webvan's was, and is based on the idea of using a company's existing infrastructure to serve Internet customers. Rather than building new warehouses, Tesco operates a "store pick" system in Britain, where orders submitted over the Internet are assembled at the nearest local store. Safeway.com will now use this model.

In contrast, Tesco's Internet arm has clicked with British Internet shoppers. It announced recently that its online arm would become profitable earlier than expected, after it enjoyed solid sales growth in 2001.

News source: CNet News