The Grocery Code Adjudicator has been closely monitoring the UK retail giant and has established assurance processes after Tesco announced its intention to levy additional charges on suppliers for online sales last year.
TescoTesco is currently being scrutinized by the UK’s supermarket regulator over its implementation of an “Amazon-style” fulfillment fee for online suppliers. The Grocery Code Adjudicator has been closely monitoring the UK retail giant and has established assurance processes after Tesco announced its intention to levy additional charges on suppliers for online sales last year.
Reportedly, Tesco faced criticism from brands and suppliers who raised concerns that the fee, covering order processing, product picking, shipping, and returns management, could potentially harm their businesses. Some also voiced objections regarding perceived unfair treatment. In response, Tesco has been required to provide the adjudicator with monthly reports. This regulatory body oversees relationships between supermarkets and suppliers, ensures compliance with the code, and prevents penalties for suppliers who opt not to pay the optional fee.
Tesco is obligated to furnish the adjudicator with all information regarding changes to store distribution, product de-listings, promotions cancellations, and alterations in new product development to prevent retaliatory actions against non-compliant suppliers.
This process is reportedly self-reported, meaning Tesco provides the regulator with the information, but the regulator has email access and can interview relevant decision-makers within Tesco.
Tesco stated that it introduced the charge due to rising fulfillment costs associated with its expanding online operations and customer base. While Tesco’s smallest suppliers with contracts of £250,000 or less are exempt from the charge, larger suppliers face fees ranging from 12p per item for branded goods to 5p for own brands. These charges also extend to online orders fulfilled through Tesco’s wholesale arm, Booker, on behalf of retail and catering customers.
Although the fee is voluntary, Tesco has reportedly informed suppliers that non-compliance could result in range reviews or reduced prices. Complaints and concerns were reportedly raised by numerous companies and trade associations when the fee was initially introduced.
Groceries Code Adjudicator Mark White emphasized that Tesco has confirmed the voluntary nature of the fulfillment fee with no repercussions for non-payment. He encouraged suppliers to reach out if they have any concerns regarding their interactions with Tesco.
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