The search for positive signs in the online grocery world has usually required a keen eye. Now it only requires a glance across the Atlantic to the UK.
That’s where online grocer Tesco.com is poised to turn a profit for the entire year, lending credence to one form of the Internet grocer business model and poking giant holes in other parts of the grand scheme.
In fact, Tesco.com has much to teach the entire U.S. e-commerce community about how to reach the promised land of profitability.
Tecsco.com is the Internet division of grocery chain Tesco. So, in other words, Tesco has a brick-and-mortar presence. That’s important, as we all know by now.
But Tesco also made an early and conscious decision to adopt a specific way of getting the groceries that it delivers across almost all of England. It doesn’t take them from warehouses. It gets them from store shelves.
This, it seems, should be good news for Peapod (Nasdaq: PPOD), the online grocer that has been bleeding money and receiving regular transfusions from Royal Ahold.
On the other hand, Webvan (Nasdaq: WBVN) can only read doom-and-gloom into that aspect of Tesco’s success. Tesco, in fact, said it looked at the warehouse option and determined it was not possible to generate enough customers to justify the capital investment or the upkeep.
But Tesco’s success story goes way beyond the grocery niche to be a virtual blueprint for how to use the Internet to make money.
Tesco expanded internationally, but not in a world-domination, no-holds-barred, conquer-the-planet kind of way. It targeted places like South Korea, where Internet use is high and where high-speed Web connections abound, enabling the grocer’s jam-packed pages to download quickly.
Load Before the Cart
And it has left no stone unturned at home either, setting up a site for blind shoppers and forging a deal that will enable it to segue into digital television when its adoption becomes more widespread.
But much of what Tesco has done is far simpler. Yes, its site is designed so the pages load quickly. A big deal? Not really, unless of course you happen to have a slow connection and abandon your shopping cart halfway through an order — as millions of online shoppers have done.
Across the Pond?
Now, not everything is as simple as cutting and pasting what Tesco has done to create U.S. online success. The markets are different. Tesco is a massive brick-and-mortar grocer that was able to absorb losses while it ramped up.
But its rarity is a sign that we should examine all of the e-commerce success stories we can find, and where possible, boil their essence down to a level we can understand.
With Tesco, success came as a result of its sound business practices and, maybe more importantly, its respect for the customer. Respect is a simple thing.
Talk about Respect
Unfortunately, respect is also an ideal that many an e-tailer has talked about without following through.
Tesco shows what can happen when that talk becomes action. Its profits are proof that doing things right pays off in the end.
Note: The opinions expressed by our columnists are their own and do not necessarily reflect the views of the E-Commerce Times or its management.