Tesco suppliers warn new fulfilment fees could threaten survival

Tesco suppliers and farmers have warned that new fulfilment fees imposed by the leading retailer could risk the survival of their businesses.

The new Amazon-style ‘fulfilment fees’, which are set to come into play from today (13 March), were explained to suppliers in a letter from the supermarket giant last week.

Understood to be at 12p per item for branded goods and 5p for own-brand, these charges will be applied to each item sold via its websites Tesco.com and Tesco.ie, as well as through its app to help cover rising online costs.

While Tesco’s smallest suppliers with contracts of £250,000 or less are set to be exempt, according to reporting by The Times, fruit and vegetable growers fear the costs will moslty affect them.

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Lea Valley Growers Association representitive, Lee Stiles told the publication: “They obviously can’t absorb thos 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.”

Tesco has since said that each cost can be negotiated with suppliers, however originially claimed that anyone not willing to comply with the charges could face the threat of range reviews of reduced prices.

The fees will also be applied to its wholesale arm, Booker across orders for retail and catering customers.

“Over recent years, the way we serve our customers has grown in both capacity and complexity,” a Tesco spokesperson told Retail Gazette.

“Our customers expect us to serve them wherever, whenever and however they want to shop. As we respond to changing shopping habits and our fulfilment costs continue to grow, we are talking to our suppliers about how we can work together to create a more balanced approach and ensure we can continue to invest in our customers.”



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