Tesco has been hit with backlash from its suppliers over plans to impose a new fulfilment fee for online orders and Booker wholesale operations.
The UK’s largest retailer has written to its suppliers explaining the new charges, are being brought in to help cover the cost of serving customers online as its digital operations grow and become more complex.
As reported by The Grocer, the fees will be coming into effect on 13 March, and Tesco said any suppliers who don’t comply with the new fees could face the threat of range reviews or reduced prices.
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While the details of the fees have not been disclosed, it is understood to be “significant” with the supermarket’s “smallest suppliers” exempt from the charges.
The fulfilment fee for Tesco UK suppliers will be applied on a pence per unit basis on all products sold through Tesco.com or on the app.
Booker suppliers and those for the Republic of Ireland will be contacted separately.
In a letter seen by The Grocer from Tesco’s chief product officer Ashwin Prasad, suppliers were told the group needs to charging the fee to share the costs for online fulfilment.
“Tesco shoulders the majority of fulfilment costs – whether it’s serving more than one million online orders a week in the UK or getting essential products to thousands of independent retailers and catering customers. We need to achieve a more balanced approach.”
The letter continues, saying: “This fee is essential as we work to fulfil more orders for our customers across the group and we are asking suppliers to engage on this request and to support us.
“Without introducing a supplier contribution, we would need to take additional decisions on range optimisation, differentiated price and trade plans. It is important you work with us on the fulfilment fee as we both look to benefit from the investment into serving customers.”
It comes as Tesco has cancelled thousands of online delivery orders after being hit with a nationwide IT malfunction.