Tesco.com looks for Eastern promise

Tesco is extending its online shopping service, Tesco.com, to countries in south-east Asia.

Tesco already has some presence in the region with 24 stores in Thailand, two in South Korea and the first in Taiwan due to open in December.

A spokesman for Tesco told silicon.com that the company had not yet finalised its plans, however, he said it is keen to expand its presence and the high level of internet use in Asia makes online shopping a viable option.

Despite the recent demise of dot-com retailers like boo.com, analysts say 'clicks and mortar' firms like Tesco can expect rapid growth over the next few years. Forrester Research predicts that the UK e-tail market will be worth almost £24bn by 2005.

While online shopping may only account for 0.4 per cent of total retail revenue in Europe at the moment, Petra Gartzen, research director with the Gartner Group, said Tesco is wise to establish an early market lead.

"I'm sure Tesco is making losses from its internet activity, but they can afford it. They see this as a learning experience in a market that could be very lucrative in the future."

However, Matthew McGarvey, B2C analyst with IDC in Hong Kong, warned that Asia's emphasis on finance and commerce means B2B is the preferred market model.

"It's a tight and tough market. B2C is small in Asia. It's typically the workplace of the world and it's better set up for B2B."

He also warned cultural differences might jeopardise Tesco's success in the market.

"Shopping is part of the culture here. People like to get out and hit the stores and that makes it difficult for ecommerce to take off. You also have to remember that Asia is 14 different countries and 14 different cultures. It's a difficult nut to crack."

Mike Honor, analyst with Forrester Research, agreed that early expansion into Asia made sense.

"It's hugely competitive in the UK. It's a highly saturated market and there are regulatory barriers stopping them from opening more stores. You've got to look at the competitive factors of Asia - population density for one thing. You can deliver to a large number of people over a short area."