Tesco goes to town in online war

TESCO plans to invest millions in an automated warehouse dedicated to its internet shopping operation in London.

Tesco.com, launched in 1996, is the world's biggest online grocer, but has been overtaken in the capital by fiveyearold Ocado, which handles online shopping for Waitrose.

Having a warehouse dedicated to online shopping is expected to be more efficient than the current system, where dedicated Tesco.com staff take products from shelves in stores.

Laura Wade-Gery, chief executive of Tesco.com, told staff that she is searching for a site close to the M25. She said Tesco's vast online customer base meant that a dedicated warehouse had now become costefficient.

Ocado co-founder Jason Gissing said: 'Having dismissed our business plan as unsustainable when we first started, Tesco obviously sees us as a serious competitor.'

Officially, Tesco is keeping its plans under wraps. A spokesman said: There are no plans that I know of to move away from our existing internet shopping arrangements.'