Tesco's online sales approach £1bn

After a year of rapid growth, Tesco has ambitious plans to make its web business even bigger

Tesco may be set to dominate the web just as it does the high street, after making almost £1bn from online sales in the past year, according to financial results announced today.

The supermarket giant reported strong performance in all areas of its business, with a 13 percent increase in sales across the group. Tesco.com enjoyed a 31 percent rise in sales, with profit up by 55 percent to £56m. The web business now accounts for three percent of total sales.

More than 750,000 people are now regular customers at the site, placing 200,000 orders each week, the firm announced. “We’re by far the largest in the world in our sector,” said Sir Terry Leahy, Tesco’s chief executive, in a webcast. “This is something like the fifth or sixth year in a row where our sales growth has been over 25 percent.”

Tesco also pointed to an improvement in the availability of goods for customers both online and offline thanks to better stock management, such as regular scanning for shelf gaps via handheld devices. Analysis of in-store picking for Tesco.com orders indicated a one percent rise in availability of goods compared with the previous year.

The firm said it is considering building up a “substantial” web operation for its non-food business, following the success of its web site and due to the large proportion of UK shoppers currently unable to easily get to a Tesco Extra store.

Tesco has also improved service for online shoppers in areas less populated with stores - for example setting up a Tesco.com store in Croydon from which to fulfil web orders.

“We found that in the south of London we were short of stores from which to operate our dot-com business and it was holding back our growth,” Leahy said. “And so we opened a dedicated facility purely for dot-com-only customers. There were no other customers allowed in the store. This has given us a lot more capacity in the south of London.” He added that Tesco could operate up to 200 delivery vans from the site.