Tesco.com is the world’s largest online grocery retailer. It has several million registered customers and at its busiest times, processes 3,000 orders an hour. When Tesco launched the online service, as a pilot in 1997, it wanted a technology infrastructure that didn’t require huge investment and scaled as the operation grew. It turned to Microsoft, and today is running Microsoft® SQL ServerTM 2000 Enterprise Edition, which underpins the entire operation. SQL Server 2000 captures and consolidates both in-store and online data across 280 stores, as well as personalising online shopping. It is central to the success of the company, helping it to grow into the world’s most successful online grocery shop, with sales of £719 million (U.S.$1.37 billion) in the 2004 fiscal year.  

Situation
Tesco.com is the largest and most successful online grocery retailer in the world. In 2004 it turned over more than £719 million (U.S.$1.37 billion), compared to £150 million (U.S.$286 million) four years earlier. It has several million registered customers and fulfils 150,000 customer orders every week.

Its success is built on an intelligent IT strategy that extracted maximum value from existing and new technology. Jon Higgins, Head of IT, Tesco.com, says: “Before our launch as a pilot, we wanted to make sensible investments in a technology infrastructure. So we aimed for an evolving approach for a service that offered lots of potential.”

Tesco.com was established to complement the existing stores infrastructure. It reflects a wider strategy to extend the shopping experience and diversify activities by building on the existing successes of the stores. A key element in driving this strategy forward is deploying technologies that can easily blend with the existing platform.  This furthers the ultimate objective of enabling customers to access what they want, when they want it, while at the same time gaining greater insight into customer behaviour.

A critical component of this strategy was fulfilling customer orders at local stores. Higgins says: “Building a separate physical distribution infrastructure would have sent costs soaring. Using stores means we can keep costs down, and roll out the service gradually.”

To achieve these aims it needed a database that could capture customer orders and transmit data to stores. But critically, it needed to scale to meet growing demand as the service evolved and be powerful enough to perform consistently as the number of customers grew.  

A further consideration that arose as the service developed was the need for a mobile element to the solution. Higgins says: “The database needed to be robust enough to handle large streams of data from the Web site. But there was also a point when we knew we would want to transfer customer orders directly from the order database to mobile devices, to increase the ease and speed of picking and packing. We required a database that could facilitate this.”

Solution
Tesco.com decided to implement a solution based on Microsoft® technologies. Higgins says: “We already had a good relationship with Microsoft and its technology was an obvious choice as a development tool set. It is very flexible and scales quickly. Database technology is obviously fundamental and a robust but scalable database was at the heart of our technology vision.”

Tesco.com implemented Microsoft SQL ServerTM version 6.5 to launch the service in 1997 and then upgraded to Microsoft SQL Server version 7.0 when it was released. During this phase the service was still being rolled out.

But in 2001, as the number of stores delivering online grocery shipping climbed to well over 200, and the number of customers increased rapidly, Tesco.com needed to upgrade to Microsoft SQL Server 2000 Enterprise Edition, part of Microsoft Windows Server System™ integrated server software.

Higgins says: “We needed further scalability, and we could also see a need for rapid and easy data transformation as well as analysis tools for customer data. SQL Server 2000 met all of these needs and now sits at the heart of our data centre as the engine for the entire service. The Web site can handle very high increases in customer use and downtime is near non-existent.”

Developers can also work easily within the SQL Server environment. Higgins says: “SQL Server includes an integrated debugger, called Transact SQL. Developers can reuse code, which simplifies the development process. It is very helpful to have an environment, that our developers and database administrators are familiar with.”

A data transformation service (DTS) makes it easy to extract, transform, and load data from different sources using object linking and embedding, open database connectivity (ODBC), or text-only files. This is critical because Tesco.com captures gigabytes of in-store data on an IBM mainframe every day. Higgins says: “We knew at some point we would want to use this data to inform the development of the Web site. DTS automates data transformation by permitting users to import or transform data automatically on a regularly scheduled basis.”

Benefits
Database Underpins Rapid Growth
Tesco.com broke into profit in 2001 aided by SQL Server 2000. Higgins says: “From 1997 to 2000 we were still rolling the service out. In 2001 we really got going, and today we have five million registered customers, 150,000 orders every week, and deliver out of 280 stores.

“SQL Server is one of our most critical assets and if it went down we would risk disappointing customers but it has always handled what we have given it to do. It processes over 3,000 online orders an hour during peak times, holds all of our customer information, and underpins the success of Tesco.com.”

Realisation of Smarter Shopping
Tesco’s long term aim is to enable customers to access what they want, when they want it and at good prices.  In short it wants to

provide a smarter shopping experience for its customers—wherever they may be. Tesco.com is a critical component within this strategy. It provides a blend of both physical stores and online shopping experiences, ensuring a consistent brand experience throughout all customer interactions.  Customers should get the same high level of service online as they do in-store.

Higgins says: “We coordinate activities across both channels. This integration also gives us a greater insight into our customers, which ultimately informs future strategic and tactical decisions.”

Drives the Introduction of Personalisation
Personalised Web sites for each customer have long been an ambition of most operators of online services, to strengthen customer loyalty and drive future sales. Tesco.com initially used SQL Server to verify customers, validate credit card details, and record items of shopping online. In October 2003 it implemented another SQL Server database to capture loyalty card customer information.

Higgins says: “When new Web site users register using their Club Card, they are presented with a list of all the products that they purchased in the last six weeks.  The Club Card information is captured on an IBM mainframe. SQL Server extracts data from the mainframe to consolidate both in-store and online information.  

 “It makes a dramatic difference to how people shop online. Shoppers don’t have to go through an extensive list, clicking individual items each time they make a purchase. All their previous purchases are presented to them in a favourites Web page. This increases customer satisfaction, which is very important to us. We have a reputation for very good in-store service and we wanted to mirror this on our Web site.”

Performance Fuels Overseas Expansion
Tesco.com in the United Kingdom has been so successful that the online grocery service has been extended abroad to 18 stores in Ireland; a joint venture in the United States with Safeway in 100 stores; and a pilot in South Korea. Higgins says: “SQL Server drives our U.K. enterprise-wide, mission-critical operation so successfully, that we have used exactly the same technology in our overseas ventures. This is a huge advantage for our global business model. Implementing a proven technology into other stores is an efficient and cost-effective way of expanding.”


Mobility Strengthens Customer Relations
Customer orders are captured in the central SQL Server environment and automatically
distributed to databases in the appropriate stores, which determine when the orders should be picked. Orders are then downloaded wirelessly onto a handheld device loaded with Microsoft Windows® XP Embedded, a secure, scalable operating system that can be customised for powering point-of-service terminals within the retail industry.

When the order is picked, the store’s SQL Server is updated. This information is then loaded onto a van driver’s Microsoft Windows Mobile™–based Pocket PC, which has a specifically designed application used to check whether a customer receives everything they ordered. If there are any inappropriate product substitutions these are identified upon delivery to the customer and the store’s SQL Server is again updated.

Higgins says: “This means we can very easily report about in-store productivity and progress and accuracy of picking and delivery. It improves store operations and ultimately benefits the customer.”

Future Business Intelligence Use
Tesco is also rolling out SQL Server 2000 Reporting Services for operational business intelligence (BI). Higgins says: “SQL Server comes with analysis services, online analytical processing (OLAP), data mining, and data warehousing tools, free of charge. While NCR Teradata will still be used for corporate purposes, we are considering the use of SQL BI for online retailing.”

“SQL Server is critical to the success of Tesco.com. It is the foundation we needed to launch the service and has underpinned our success. SQL Server has scaled with our growth and is consistently reliable. It has become an enterprise wide mission critical tool that we couldn’t do without. We will also upgrade to SQL Server 2005, when it becomes available. It delivers increased scalability and security to enterprise data and analytical applications.”