Did Tesco have an it-generated competitive advantage?

The answer in my opinion is yes! So what was it. As early as 1984 Tesco was delivering online shopping. According to Wikipedia:"In May 1984, in Gateshead, England, the world's first recorded online home shopper, Mrs Jane Snowball, purchased groceries from her local Tesco store in the world's first recorded online shopping transaction from the home".

From 1996 Tesco brought retail shopping on a larger scale to the web with its Tesco direct service. In 2001 Tesco was already profitable and in those days it was the only company doing so. One of the factors that was the key to this success was the fact that Tesco didn't stop with just offering to deliver groceries online.

An extract from the case reveals what other services they delivered via Tesco online: "Tesco created virtual storefronts, or superstores, that allowed it to sell books from its book warehouse, electrical appliances from its electrical warehouse, as well as videos and many other products. Tesco also added many online services: Price Check, for instance, designed to allow customers compare Tesco's prices against those of leading supermarkets and retail chains. Also included were financial services, where customers can trade shares and interact with their Clubcard Plus account; a shopping service that remembers a customer's last shopping list; and many online features all supported by an extensive help facility that thoroughly answered all customers questions".

There was no other competitor in the market that delivered these combined services online. Part of Tesco strategy was to develop and diversify itself in many sectors. While around the turn of the century the competition was struggling with its online services that required cash injections, Tesco direct had "750,000 registered customers and Tesco.com generated 70,000 orders per week on an average basket size of £85 that produced a turnover of £176 million (a 77% increase)".

Although the online division of Tesco was only good for about 1,5% of the total turnover, Tesco had a competitive advantage. It might not have been so much in the local GB market, where they will try to prevent cannibalizing their physical outlet channels as much as possible, but moreover in their expansion abroad where they could compete with local grocery companies that thus far (at the time of the case) had been unsuccessful in setting up profitable online sales channels.

And the best thing of all, if they would be very successful in doing so, they could have a global presence without having to fight the fierce competition of local physical competitors and avoid the huge overhead of having traditional shops.