Shopping online at Tesco.

Byline: September 2000, Tesco.com had 750,000 registered customers and had

Customers value the time savings of not having to drive to the store, manually pick the groceries, queue up to pay, drive home and unload the car.

They do, however, enjoy the opportunity to touch and feel the produce. Tesco has managed to streamline the customer's shopping scenario while ensuring customers get the quality and the prices they want.

Seybold's exclusive column for Catalyst continues last week's discussion on customer scenario design and how supermarket major Tesco used it to advantage.

TESCO plc is a UK-based global supermarket chain with annual revenues of GBP20 billion. An established presence with a huge brick-and-mortar infrastructure, Tesco is also the world's most successful and profitable online grocer. It has worked hard to streamline the customer's grocery shopping scenario, both in-store and online. No other online grocer has seamlessly integrated customers' in-store shopping and their online shopping.

What's the typical grocery shopping customer scenario?

Decide what my family needs this week

- Make a shopping list

- Go to the store

- Select groceries and pay for them

- Take them home

- Put them away

Customers value the time savings of not having to drive to the store, do the manual labour of picking out the groceries, stand in line to pay for them, drive home and unload the car. Customers do, however, usually enjoy the opportunity to touch and feel the fresh produce and to make 'impulse buys'. Here's how Tesco's team worked to streamline the customer's shopping scenario while maintaining the attributes that customers value: getting the quality, the assortment, and the prices they want.

Many online grocery services presume that it's more cost-effective to handle inventory and fulfilment operations from a distribution warehouse. But Gary Sargeant, who was appointed to head up the Tesco Direct operation in 1996, was a former store manager. He realised that customers would prefer to purchase online from the store in which they would normally shop in person. That way, customers would receive the same price for each item online as the price in the store nearest their home.

Customers were also familiar with the selection of products available in their local stores. By linking the online shopping application directly to each store's inventory systems, it was …