// Tesco rises supplier distribution fees for third time in as many years
// The supermarket said it can no longer afford to subsidise companies using its primary distribution service.
Tesco has raised supplier distribution fees for the third time in three years as it looks to cover the growing costs of online fulfilment.
The supermarket giant has given suppliers four weeks’ notice of the change in rates, which will see fees rise by nearly 30% since the pandemic, The Grocer reported.
Tesco told suppliers it can no longer afford to subsidise businesses using its primary distribution service.
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In a letter seen by The Grocer from Tesco’s primary commercial manager Michelle Day, suppliers were told the group faced increasing cost pressures from a “shortage of drivers and the pressure on wages, inflation levels, increased energy, fleet and insurance costs”.
“These factors are outside of our control but as Tesco Primary we do our best to limit the impact of these cost pressures.”
The letter goes on to say the supermarket had been “subsidising several increased costs for several months” but following a review, it was making changes to its rates.
The increase in rates follows a 8% rise last year, adding to the 14% surcharge introduced in July 2021.
Tesco was slammed by suppliers earlier this year when it asked them to pay fulfilment fees for using its online and wholesale Book services.
At the time, the supermarket defended its decision and said: “Over recent years, the way we serve our customers has grown in both capacity and complexity.
“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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