Tesco.com is now the world's largest and by far the most profitable online grocery retailer. In 1996 Tesco.com was alone in developing a 'store-based' supply network strategy which entailed using its existing stores to assemble customer orders which were placed on-line. Tesco staff would simply be given print-outs of customer orders and would then walk round the store picking items off the shelves. The groceries would then be delivered to customers by a local fleet of Tesco vans. By contrast, many new e-grocery entrants and some existing super- markets pursued a 'warehouse' supply network strategy of building new, large, totally automated and dedicated regional warehouses. Because forecasts for on-line demand were so high, they believed that the economies of scale of dedicated warehouses would be worth the investment. In the late 1990s Tesco came under criticism for being overcautious and in 1999 reviewed its strategy. It concluded that its store-based strategy was correct and persevered. By contrast, the most famous of the pure e-grocery companies was called WebVan. At the height of the dot-com phenomenon WebVan Group went public with a first-day market capitalization of $7.6 billion. By 2001, having burned its way through $1.2 billion in capital before filing for bankruptcy, WebVan Group had gone bust, letting go all of its workers and auctioning off everything from warehouse equipment to software.
(a) Draw the different supply network strategies for Tesco and companies like WebVan.
(b) What do you think the economy-of-scale curves for the Tesco operation and the WebVan operation would look like relative to each other? 

(c) Why do you think WebVan went bust and Tesco was so successful?