Tesco is launching a non-food home shopping service, that will directly compete in the catalogue shopping sector.
The new Tesco Direct service will initially cost the company £25m to £30m in start-up costs. Tesco has purchased two distribution centres in Daventry and Crewe and 100 new vans to cater for the new service.
The home shopping sector has so far proven successful for Tesco, with its website Tesco.com making around £56m in 2005.
Tesco Direct will offer 8,000 non-food products from its website and 2,000 from a catalogue. Initially customers will only be able to collect items from 15 Tesco stores around the UK or organise a two hour window for deliveries, although this option will carry a cost of £7.
TNT has won a five-year contract to handle the delivery for the newly-launched service. Both TNT Home Fleet and Tesco vehicles will be used with a two man system.
The operation will be run out of the brand new 38,000 sq m national distribution centre at Crewe which TNT will manage on Tesco’s behalf. Initially over 200 TNT staff will be employed on the operation. Although TNT says that this number will increase as sales volumes accelerate.
TNT Logistics has installed software systems, including its HDi home delivery system, Red Prairie’s DLx warehouse management system, Paragon route planning and PenPod for the collection of electronic signatures.
