Tesco is the third UK marketplace to shut this year, following the closure of the Halfords marketplace in April and Gameseek calling in the liquidators.
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.
10 Responses
Overseas marketplaces are the only other option we really have in the UK. We have let 2 overseas marketplaces totally dominate our own domestic market (caused a right race to the bottom) and have pretty much full control of thousands of Uk small businesses in turn. That is before we even get into what is happening to hundreds of high street shops and independent biz like Game seek…(fair few biting the bullet now)…
Least it is easy to get our products overseas…. ahhh wait a minute oops we have Brexit to kill that business also…can count on the Tories to destroy just about everything in 8 years…tax Dodgers and bankers will be ok as norm..
Wow how sad.
I thought it meant they were pulling out of selling on eBay, but never mind hopefully that will come soon as well. Then eBay will have one less big boy to set standards by that squeezes the little businesses.
Very sad to hear. Watched the marketplace closely for years now and could see the potential – seems a shame to close!
We are merchant partner on Tesco Direct & they have not even emailed us yet to tell us what is happening. We found out from Sky news!
Sad had some good prices and geat deals