Online Grocery Business

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International Journal of Cases on Electronic Commerce, 1(2), 57-78, April-June 2005 57 701 E. Chocolate Avenue, Suite 200, Hershey PA 17033-1240, USA Tel: 717/533-8845; Fax 717/533-8661; URL-



Building an Online Grocery Business:
The Case of
Irene Yousept, University of Newcastle upon Tyne Business School, UK Feng Li, University of Newcastle upon Tyne Business School, UK

This paper uses the case of, ASDA’s home-shopping arm, to demonstrate the challenges in building and developing an online grocery business in the UK. To set the stage, the initial implementation and learning from phone/catalogue home-shopping in ASDA is outlined to demonstrate why e-commerce was seen as most economically suitable to conduct a grocery home-shopping business. Then the paper illustrates the development stages and critical aspects of’s Web shop. Particularly, it delineates the operational aspects of B2C e-commerce in the grocery business: fulfillment center and fulfillment process. The case will also describe ASDA’s efforts in overcoming problems with their home-shopping fulfillment model and present important elements of’s virtual store and its operation. The paper concludes with the challenges that has been facing, their current status, and future prospects. Keywords: B2C e-commerce; digital economy; distribution channels; e-business; e-commerce expansion; e-commerce implementation;e-commerce needs; e-commerce planning; e-commerce problems; e-grocery market; e-operation; e-retailing; e-tailing; electronic business; electronic retailing; electronic shopping; information economy; Internet commerce; Internet economy; online grocery shopping; online shopping; service industry; virtual shopping; Web shopping; Web site design; Web-based commerece

ASDA Stores Ltd. ( was Britain’s second largest supermarket retailer, with a turnover of £13.2 billion (for fiscal year ending December 31, 2003). The company’s trading activities involved the operation of food, clothing, home, and leisure superstores throughout Great Britain, mainly targeted at the British working class family. With its superstore format, the company had been very strong in non-food offerings. In January 2004, ASDA had 255 stores and 24 depots around UK with 122,000 employees and was a subsidiary of US-based Wal-Mart Stores Incorporated (http://, the biggest retailer in the world. This paper appears in Idea journal International Journal of Cases in print or electronic forms without written Copyright © 2005, the Group Inc. Copying or distributing on Electronic Commerce edited by Mehdi KhosrowPour. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. permission.

58 International Journal of Cases on Electronic Commerce, 1(2), 57-78, April-June 2005

Wal-Mart Stores Inc., ASDA’s parent, was founded by Sam Walton in Bentonville, Arkansas, United States (US) in 1962. In the fiscal year ending January 31, 2004, the company was one of the biggest in the world, with a turnover of around $256.329 billion (£142.405 billion) under the lead of H. Lee Scott, Jr. the president and CEO. In total, Wal-Mart had nearly 5,000 stores and wholesale clubs across 10 countries and more than 1.3 million employees worldwide (which were referred to as the “associates” in Wal-Mart or “colleagues” in ASDA). The ASDA headquarters were based in Leeds. Leeds is the premier city in Yorkshire, one of the northern counties in the United Kingdom. The company was founded by a group of Yorkshire farmers in 1965 as Associated Dairies. Its first store opened in the same year, and since then, it has specialized in bulk selling at low prices. ASDA then expanded into the South of England in the 1970s and 1980s. The company was acquired in...
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