TESCO.COM HOME PAGES DRAW HIGHER SHOPPING

DAN ALAIMO

SAN DIEGO -- In an effort to increase the shopping frequency of new and occasional customers, Tesco.com, Welwyn Garden City, England, is introducing separate home pages for its Web site that address the varying levels of experience of different consumer segments.

The change was expected this week, Paul Arnold, Tesco.com's development architect, told SN during the recent Global Electronic Marketing Conference (GEMCON) here.

The separate home pages were developed to segment new customers from experienced shoppers, and will be introduced initially in the United Kingdom, he said. "We have three different grocery home pages that come up. If the customer is brand new to the site, we give them a very simple Web page to use."

Tesco.com does not try to do too much with these customers, such as attempting to get them to make more purchases. The retailer wants to communicate that the site is easy to use and give them the experience of buying something, Arnold said. "The objective with a brand new customer is to get them to the checkout screen as quickly as possible, with a mechanism that is as simple as possible," he said.

With the more advanced customers, Tesco.com puts "a little bit more excitement and fun" on the page they see, and encourages them to do more complex maneuvers or transactions, he said. "With the experienced customer, they get the whole works on the home page. They no longer need to be told how to use the site," Arnold said.

Tesco.com claims to be the only profitable online grocery operation. In July, it formed a U.S. alliance with Safeway, Pleasanton, Calif., by making a $22 million cash investment in Safeway-controlled GroceryWorks.com, Dallas.

"We've become the world's largest and most successful online grocery retailer. We make money on every single order we take," Arnold said. Tesco has more than 845 stores in the U.K., Ireland, Central Europe and Asia. Its online service operates out of about 250 stores in the U.K, taking 72,000 orders a week, with annualized sales of about $400 million. Besides its venture with Safeway, Tesco.com is also expanding in Korea, he said.

The new, targeted home pages are part of a general shift in marketing strategy at Tesco.com from customer personalization to segmentation of customer groups, he said. "About a year ago, we were seduced by the idea that we could up-sell and cross-sell better by looking at the products that customers have purchased and then recommending other products to them, Arnold said. Tesco.com had been impressed with how Amazon.com does this with books.

"But in grocery, if you recommend that a customer buy bananas when they don't buy bananas because most of the rest of the population is buying bananas, it doesn't work very well. It's very hard to recommend a specific product because the basket size is so huge," he said.

"Now we think we will be much better off by segmenting our customers." By understanding group behavior, Tesco.com wants to target small groups of customers, and get them to shop more frequently. "We've come to the conclusion that it is much easier to make customers shop more frequently than it is to make them put more products in a shopping basket," Arnold said.

The goals in segmenting is to create groups of customers with similar needs, preferences and behavior, Arnold said. These groups need to be large enough to be viable for marketing, but small enough to distinguish subtle differences in behavior, he said. These segments need to be refreshed regularly and any movement that is tracked must reflect a real change in the shopper's behavior, he said.

In some early results from the project, the retailer has been able to identify dedicated, established shoppers. "Trying to sell them more stuff is probably not a good idea because they already buy all their food from us. To try to sell them more, at worst, is going to upset them," he said.

But for customers that shop Tesco.com regularly, but don't spend as much as other shoppers, the retailer wants to steer them to areas of the site they might not be visiting, he said. For example, Tesco.com offers books, compact disks, computer games and many other products on its Web site. "But we want to be very careful with those people because they have established an account with us," he said.

Some challenges the retailer would like to resolve are why online customers buy fewer convenience foods online than in-store shoppers, and how to give them more confidence in purchasing produce online, Arnold said.