Tesco’s suppliers and farmers are not happy over its recent move to charge Amazon-style ‘fulfilment fees’, which are set to come into play from today (13). They have warned new fulfilment fees imposed by the grocer on produce sold through its website could put them out of business.
Tesco suppliers have been told end of last week that they will have to pay a new charge when the supermarket sells their products online. An email, seen by the BBC, warns suppliers could be penalised if they do not agree to the new “fulfilment fee”. The retail giant said the new charges were essential to help it “shoulder the costs” of serving more customers shopping online.
Tesco did not specify the fees in its email but it is understood suppliers could face costs of 12p per item on branded goods and 5p for own-label products, irrespective of price point. Small businesses with a turnover of less than £250,000 would not have to pay the fee, but online sales through the company’s wholesale Booker business would be included.
“Tesco shoulders the majority of fulfilment costs – whether it’s serving more than one million online orders a week or getting products to thousands of independent retailers and catering customers,” the email stated.
It said it needed a “more balanced approach” and that unless suppliers agreed to sign up to the fee they could face range reviews and different price plans.
Tesco’s announcement is being slammed by its suppliers as well as retail experts.
Lea Valley Growers Association representative, Lee Stiles told The Times that they obviously can’t absorb those kind of cost so it will be passed down to the grower.
“It’s just another unwanted additional squeeze on the thin margins that already exist. It could be the difference between a supplier carrying on or shutting up shop.”
Business retail consultant Ged Futter said the move was “outrageous”, saying Tesco has “picked the wrong moment to do this”.
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