The retail giant warned suppliers in an email if they do not agree to the new “fulfilment fee,” they will face penalties. According to sources, the fee on branded goods could be as high as 12p per item and 5p on own-label products, regardless of price point. Retail experts have called the move “outrageous,” claiming that no other supermarkets use this type of business model.
Tesco claims that the new charges are necessary to help the company “shoulder the costs” of serving more customers who shop online. Tesco stated in an email to suppliers that it had grown to become the UK’s largest online grocery home shopping service and leading wholesale business. “Whether it’s serving more than one million online orders per week or getting products to thousands of independent retailers and catering customers,” Tesco stated.
Small businesses with less than £250,000 in revenue would be exempt from the fee, but online sales through the company’s wholesale Booker cash and carry business would be included. Tesco warned suppliers that unless they agreed to pay the fee, they would face range reviews and different pricing plans.
Many suppliers, including those who supply Tesco’s wholesale business, have been outraged by the move. Tesco has “chosen the wrong time to do this,” according to business retail consultant Ged Futter. He believes that because Tesco refuses to accept price increases from suppliers, there will be more gaps on supermarket shelves in the near future. On Thursday afternoon, Mr Futter received 15 calls from suppliers, all of whom stated that they would refuse to pay the fee.