Tesco say that they have conducted a detailed review of Tesco Direct, their non-food website, and has concluded that, despite best efforts, there is no route to profitability for this small, loss-making part of the business. However Tesco Direct included the Tesco Marketplace and their Press Office have confirmed by telephone that the marketplace will also close.
Tesco Direct will cease trading on the 9th of July 2018 and, as part of this, the intention is to close the fulfilment centre at Fenny Lock which handles Tesco Direct orders. Sadly around 500 employees will be at risk of redundancy across the business.
This will also have a significant impact on the several hundred third party merchants who sell on the Tesco Marketplace. We’ve already heard from merchants who have committed to stock orders for Christmas on the back of anticipated sales based on past performance on Tesco. Whilst we believe there were no more than 300-400 merchants selling on Tesco, for those that did sales were relatively strong and they are looking at the loss of multiple hundreds of thousands of pounds worth of turnover.
Tesco Direct always sat slightly awkwardly alongside the main Tesco site (as does their wine offering) and the plan is to roll non-food products into the same platform as their groceries at tesco.com.
“We want to offer our customers the ability to buy groceries and non-food products in one place and that’s why we are focusing our investment into one online platform.
This decision has been a very difficult one to make, but it is an essential step towards establishing a more sustainable non-food offer and growing our business for the future.”
– Charles Wilson, CEO of Tesco UK & ROI
The UK marketplace field has already considerably contracted this year leaving eBay and Amazon as the default marketplaces of choice for both consumers and for merchants wishing to sell online. There are smaller marketplaces and specialist niche marketplaces but they don’t yet have the pulling power of the big two. For merchants wishing to diversify their businesses and reduce their reliance on eBay and Amazon expanding to overseas marketplaces is looking increasingly like the only current option for those wishing to expand at scale, although supporting the alternatives is the only way that they will grow.
Our thoughts do of course go out to those Tesco employees and merchants whose jobs are at risk.