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Tesco faces backlash over ‘fulfilment fees’ from suppliers who sell online

Tesco has imposed new Amazon-style “fulfilment fees” on suppliers who sell products online, threatening to put many of them out of business, distressed farmers warned.

An internal email, seen by the BBC, notes a possible penalty for those suppliers who do not agree with the new fulfilment fee per item.

Allegedly, the new charges stand at 12p per item for branded goods and 5p for own brand, although Tesco added that these can be negotiated directly with suppliers.

Tesco called the decision essential to help it “shoulder the costs” of dealing with an influx of online customers.

Small businesses with a turnover of less than £250,000 do not fall under the scope of the new charges, but companies like fruit and vegetable growers, which sell via larger middlemen, are under threat.

Lee Stiles, of the Lea Valley Growers Association, said that the new rules “don’t make any sense at all,” adding:

“The optics of it look like they’re trying to protect shareholder profits rather than trying to work in collaboration with British growers.”

According to Stiles, the costs would simply be passed down from the larger distributors to the grower, which “could be the difference between a supplier carrying on or shutting up shop.”

Although the fees could apply shortly, there is no deadline to sign up, with the charges relating to all goods sold on Tesco’s UK or Irish website, as well as orders for retail and catering customers made through Booker, Tesco’s subsidiary.

Another retail expert, a former Asda buyer Ged Futter, told The Times that the move was “out of tune with reality,” as Tesco doesn’t only refuse to pay suppliers “to put up the costs that they need” but charges the same suppliers for “the privilege of using online.”

Tesco responded to the comments by highlighting its initiative to help British farmers, which includes higher payments to chilled vegetable growers.

The supermarket giant has also launched a new online marketplace Tesco Exchange, with over 3,500 of its suppliers now able to sell or donate surplus stock between each other, cutting production costs and reducing waste.


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