Britain's biggest grocer Tesco said today it would pay $22 million for a stake in US group Safeway Inc's online outlet GroceryWorks to get a toehold in the world's largest home-shopping market.
In return Safeway's GroceryWorks would benefit from the know-how that has made Tesco.com the world's biggest and only profitable online grocer, the two firms said in a statement.
Tesco claims its online shopping service, supplied from its supermarkets, has a two-year lead over other Internet retailers like US based Webvan Group that have burned cash building a network of expensive warehouses.
Under the deal Tesco said it had taken a 35 per cent stake in GroceryWorks for $22 million cash, intellectual property and technical resources. Safeway holds 50 per cent of the business and the rest is held by other shareholders.
In Britain, Tesco's 50 million customers will generate online sales of around £300 million sterling this year. Safeway's US customer base is three times that size.
Tesco.com picks around 70,000 orders a week from 240 British stores. Worldwide, Tesco has 900 stores and 240,000 staff.