Asda does U-turn on approach to online shopping

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ASDA, the supermarket chain owned by the US retailer Wal-Mart, has carried out a U-turn in its internet shopping strategy by shutting its two South-east depots dedicated to servicing online customers.

Instead of delivering goods ordered over the internet from those bespoke depots, Asda plans to meet orders placed on the net entirely from its stores. The company warned London-based users of Asda @t home who are currently served from the two depots in Watford and Croydon would experience a reduced level of service until the transfer to the store-based arrangement was completed – a process expected to take three months. The two depots employ 331 workers. A spokesman for Asda said yesterday there were more vacancies in the South-East stores than there were workers, implying all the affected jobs would be safe.

The move brings the company into line with its arch-rival Tesco, which has always used its stores to meet and deliver orders made over the internet. Asda had initially invested around £2m in setting up each depot when it launched its internet shopping service in 1999, mainly because it had fewer stores in the South-East at that time. In August of 2000, the company launched its first store-based service and rolled that system out across the rest of the country. The South-East was the only region to offer the service from the depots. The spokesman said yesterday that Asda had been running both methods for some time but had decided that servicing customers from its stores was more cost effective. "For customers there's no difference. It's just that what they've ordered comes from the stores rather than dedicated picking centres," he said, adding: "That's the model we operate across the rest of the country."

The move to close the depots was part of a wider restructuring of the Asda @t home service. The company also said it planned to double the number of products available to order in the South-East region from 5,500 to 11,000. It also aims to be able to offer the service to 14 million households by the end of the year compared with the current 8.4 million. The company also announced plans to start a price war in clothing this week by slashing the prices of its 'Essentially George' clothing range. As of Wednesday, the price of its men's jeans, for example, will fall to £8 from £9.

Sheena Forde, Asda's e-commerce director, said: "Our home shopping service is going from strength to strength. Eight million households already have access and our roll-out to more stores will help us bring ASDA @t Home to 60 per cent of the UK by the end of this year."