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.