TESCO TO RAMP UP ON-LINE ORDER CAPABILITIES

JEAN THILMANY

CHICAGO -- Tesco Stores, London, plans to expand its on-line order-fulfillment operation from 25 to 100 stores by year's end, said Ian O'Reilly, group information director at Tesco.

O'Reilly spoke last week at the Retail Systems 1999 Conference and Exposition here, sponsored by Retail Systems Alert Group, Newton Upper Falls, Mass.

Currently, about 1,000 customers use the primarily Internet-based service, which has been available about three years in an initial, pilot stage, he added. "What's driving this is the convenience," he said. "But we have to make sure we provide an adequate service level."

Tesco operates about 800 stores, mainly in the United Kingdom but also throughout central Europe, O'Reilly said. The Web-based ordering system is currently available only at 25 stores in England.

Some Tesco customers who use the service still phone or fax their orders to their local Tesco store. In the future, the retailer may look at making the service available to users via a Web-based application accessible through a home television. But for now, O'Reilly said, consumers order on-line over the retailer's private Internet service provider.

When implementing the Web-ordering process, Tesco executives determined they needed orders to be picked and fulfilled at the individual store level rather than at Tesco warehouses, O'Reilly said.

Tesco realizes the least capital expenditure when orders are picked from store shelves, packed at the stores and delivered within a 5-mile radius of the store, he added. This is because products can be picked quicker, using an easier system, from store shelves than from warehouse shelves, O'Reilly said.

Some Tesco Web shoppers have access to a handheld scanner, provided by Tesco. They use this to scan the bar codes from their favorite food items into their computers. The Web site then compiles lists of favorites based on the base codes and places those favorites at the top of shopping lists for easy reordering.

In addition to choosing favorites, customers can browse through the retailer's on-line list of available products, which is the same list as products included in the store's point-of-sale system, O'Reilly said. That way, customers are assured of receiving current product and price lists.

"We take out-of-stocks out of that list right away, so there's no chance a customer could order them," he said.

After the list is complete, the customer receives a price total. Orders are paid for with credit cards, though the cards aren't billed until the customer receives and approves the delivery, O'Reilly said.

Electronic orders travel from the Tesco mainframe to the appropriate store server and are then sent by radio frequency to a touch screen included on a grocery cart. An associate then walks through the store with the cart, checking items off via the touch screen after they're placed in the cart.

Carts are subdivided to allow the associates to pick up to four orders at a time. Each order is placed in another part of the cart, O'Reilly said. The screen is subdivided by order and items are placed on the list in accordance with store layout, O'Reilly said.

"Pickers have handheld scanners to scan shelf labels, like produce shelf labels, to make sure they're picking the right item," he added.

After the order is complete, it's loaded into the delivery truck that heads for the customer's home or office.

Deliveries are made within two hours of customer order. Delivery cost is $8, the only extra cost involved in ordering items on-line rather than shopping in the store, O'Reilly said.