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U.K. grocer closing e-commerce warehouses

Instead, grocery chain Asda will fulfill all of its online orders from the actual brick-and-mortar stores. But will the move help its e-commerce operations?

By Graeme Wearden

U.K. supermarket chain Asda is planning to follow Tesco's lead by fulfilling all its Internet orders through its existing stores, rather than by operating separate warehouses for its online shoppers.

According to The Independent, Asda is to close two storage facilities in southeast England that are used just to meet orders placed online. It then plans to use its existing supermarkets to satisfy all its online orders--a model that has already been successful for rival Tesco.

The two sites--in Watford and Croydon--were set up in 1999 and have been dedicated to servicing online customers. Asda took this step because it felt that it did not have enough existing supermarket stores in southeast England to cope with additional demand from Internet shoppers.

Online orders placed by Asda customers in the rest of the United Kingdom are already filled at local stores--employees walk around the aisles collecting the required products. The closure of the Watford and Croydon sites will mean that Asda will no longer support both models of e-commerce fulfillment.

The success of Tesco Direct is widely seen as confirmation that established retailers can succeed in the e-commerce world by using their existing infrastructure to serve online customers. It began an online ordering service in 1996, and has always assembled online orders directly in local supermarkets.

In contrast, Webvan--which spent large sums of money constructing its own warehouses--shut down and filed for bankruptcy last summer.

Tesco recently announced a deal with U.S. giant Safeway to begin joint operations in the United States.

Asda is hoping the closure of the two storage facilities--which should not involve any job losses--will help it to improve its e-commerce operations. According to The Independent, Asda hopes to offer online ordering to 14 million households by the end of 2002--compared with 8.4 million now.

Staff writer Graeme Wearden reported from London.