Asda is closing its two home delivery picking depots and has abandoned plans for a further 11 nationwide as it restructures the Asda@tHome service.
All home shopping orders will be serviced from local stores from April, when picking depots in Watford and Croydon will close.
Delivery slots will be drastically reduced in the three- month changeover period, and 331 staff face transfer or redundancy.
Eleven Asda stores in the south-east are being upgraded to handle home deliveries, and more larger stores will be added this year.
Asda already services remote orders from stores in the other areas of England and Wales where Asda@tHome has coverage.
The supermarket denied speculation that it was not getting volumes of orders it needed to justify running dedicated picking centres.
A spokesman said sales at Asda@tHome, which launched online at the end of 2000, were 150% up in 2001.
And 11,000 products can be delivered from stores, but only 5,500 from picking centres. Non food items, such as electrical goods, will soon be added to that range.
Asda e-commerce director Sheena Forde said: "Eight million households already have access and our roll out to more stores will help us bring Asda@tHome to 60% of the UK by the end of this year."
Two other major retailer groups are still using picking centres. They are the Ocado/ Waitrose online shopping service, on trial and due to launch early this year, and Sainsbury, which has adopted a hybrid model of two picking centres and 50 stores which cover areas where Sainsbury to You order volumes are lower.
l Tesco's online shopping arm sold a record number of CDs, DVDs and wine in the run up to Christmas as customers logged on over the festive season.
Tesco.com chief executive John Browett said non food was a key growth driver with sales two to three times ahead of forecasts in the six weeks to Christmas. "We made over 100,000 deliveries in the Christmas week," said Browett. "This is dramatically up on last year and proves this is becoming a mass market proposition. We're cheaper than Amazon on the top 50 books and we sold over 230,000 CDs and DVDS in the run up to Christmas."
Wine sales topped one million bottles over the same period, with particularly strong sales in the £5-£10 a bottle range from Wine Warehouse.
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