// Tesco has been criticised over new fulfilment fees for its online and Booker wholesale operations
// In a letter to suppliers, the retailer said those who don’t comply will face a series of potential measures
Tesco has faced backlash from its suppliers over plans to impose a new fulfilment fees for online and Booker wholesale operations.
The supermarket giant has written to suppliers on its intent to introduce a new fulfilment fee explaining the new charges are to help cover the cost of serving customers online as its digital operations grow and become more complex.
According to The Grocer, suppliers who don’t comply with the new fees could face the threat of range reviews or reduced prices.
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 retailer said the new fee will be applied across the whole Tesco Group with the first rollout to the Tesco UK and Republic of Ireland and Booker businesses.
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The fulfilment fee for Tesco UK and Republic of Ireland suppliers will be applied on a pence per unit basis on all products sold through Tesco.com, Tesco.ie or on the app.
For Booker suppliers, the fee will be applied on all orders fulfilled on behalf of retail and catering customers.
Products sold in Tesco stores or through Booker’s Cash & Carry business will not be included.
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 a fairer burden of 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 goes on to warn suppliers that those who don’t comply will face a series of potential measures.
“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.”
A Tesco spokesperson told Retail Gazette: “Over recent years, the way we serve our customers has grown in both capacity and complexity.
“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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