// Tesco has tried to ease supplier concerns over its fulfilment fees proposals
// Tesco has not withdrawn its plans and new details despite backlash
Tesco is attempting to ease supplier concerns over its fulfilment fees proposals.
The grocer‘s chief product officer Ashwin Prasad has apologised for some of the ways it dealt with the situation during a webinar.
However, Tesco has not withdrawn its plans and new details, which suggest that the cost to branded suppliers could be even higher than initially planned.
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Prasad’s letter to suppliers earlier this month unveiled plans to introduce fees for suppliers using its online operations and Booker wholesale arm.
Tesco initially looked to bill branded suppliers 12p per unit and 5p for own-label suppliers, but it is now understood that this will “start” from 12p, The Grocer reported.
Information on its supplier portal led suppliers to believe the fees would come in as early as 13 March although Tesco later backtracked.
According to suppliers, Prasad blamed the demand on a technical error with its systems, but is not believed to have directly addressed a threat in the letter that suppliers could face range reviews if they failed to sign up.
“It was a very scripted message,” said one supplier on the webinar.
“But there was no attempt to pivot away.
“Tesco is still making the argument that online is growing, it’s expensive and that suppliers need to come on board to pay more of the cost.”
“The fact is if you’re a brand selling products with a high unit cost you may not consider a 12p fee too onerous, but for people selling products at £1 per unit or less this could effectively wipe out profits,” said a source.
Prasad “reinforced it was a voluntary scheme and there were no consequences” said the source, adding it was a “very important distinction”.
“They now need to stand by that because the original letter threatened to downsize people’s businesses.
“Suppliers also have to reject this as in Holborn, Leeds and Bradford – they will be watching.”
