Safeway Launches New Online Grocery Joint Venture with Tesco

09 January 2002

Reversing the recent stampede out of US online grocery ventures by such well funded e-grocers as Webvan, HomeGrocer and HomeRun [WAMN: 10-Jul-01], top five US supermarket chain Safeway has launched a 20-store trial to customers in the Portland and Beaverton, Oregon and Vancouver, Washington region.

Launched with a subterranean profile and virtually nil marketing support, the venture is notable not only for its valor but also because of the involvement of Tesco – Britain's largest supermarket retailer and the only European e-grocer thought not to be losing money.

Many observers attribute Tesco’s success to confining the cyber-service within its existing local infrastructures, nailing funding and overheads to the floorboards rather than investing heavily in centralized warehousing and distribution. Instead, consumers place their orders with a central website which are then beamed to the customer’s nearest store for picking, packing and home delivery.

The supermarket duo signalled their intentions last year when Tesco invested $22 million for 35% of Safeway unit, since integrated into the site [WAMN: 26-Jun-01].

Currently, there are only two serious non-local players still in the US e-grocery game: (funded by supermarket retailer Ahold USA) and (backers: Parmalat and Cendant Corporation). Neither are making money.

The while, Safeway prudently refuses to be drawn as to a rollout of the new service to other of its 1,650 stores throughout the US and Canada.

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