Tesco to charge suppliers extra to sell online

Tesco suppliers have been told they will have to pay a new charge when the supermarket sells their products online.

An email, seen by the BBC, warns suppliers could be penalised if they do not agree to the new "fulfilment fee".

The retail giant said the new charges were essential to help it "shoulder the costs" of serving more customers shopping online.

Business retail consultant Ged Futter said the move was "outrageous".

Tesco did not specify the fees in its email but it is understood suppliers could face costs of 12p per item on branded goods and 5p for own-label products, irrespective of price point.

Small businesses with a turnover of less than £250,000 would not have to pay the fee, but online sales through the company's wholesale Booker business would be included.

In the email sent to its suppliers, Tesco said it had grown to become the UK's largest online grocery home shopping service and leading wholesale business.

"Tesco shoulders the majority of fulfilment costs - whether it's serving more than one million online orders a week or getting products to thousands of independent retailers and catering customers," it stated.

It said it needed a "more balanced approach" and that unless suppliers agreed to sign up to the fee they could face range reviews and different price plans.

Mr Futter, a former buyer for Asda, did not believe any other supermarkets used this type of operating model, which he understood was due to start next week.

The retail price consultant, who helps businesses negotiate with supermarkets, said he received 15 calls from suppliers on Thursday afternoon. They all told him they would refuse to pay the fee.

Mr Futter said Tesco had "picked the wrong moment to do this".

As Tesco was not accepting price increases from suppliers there would soon be more gaps on the supermarket shelves, he added.

Mr Futter said he understood the scheme was due to start next week, but Tesco said the letter was "the start of conversations with our suppliers" and there was no deadline for engagement.

The retailer said its smallest suppliers would not be liable for the fee: "We know there are some real pressures on many of our suppliers, particularly in agriculture, and we have stepped up support in response to that."

The government's Groceries Code Adjudicator, which regulates relationships between supermarkets and suppliers, said it was aware of the issue and seeking further information from Tesco.

It encouraged suppliers with concerns to get in touch.