High fulfilment costs sink Tesco Direct

Tesco conducted a detailed review of Tesco Direct, its non-food website, and has concluded that, despite its best efforts, there is no route to profitability for this small, loss-making part of the business.

Tesco Direct has faced a number of significant challenges, including high costs for fulfilment and online marketing, which have prevented it from delivering a sustainable offer as a standalone non-food business.

Tesco remains committed to bringing a compelling range of general merchandise to its customers, both in-store and online at Tesco.com. It is Tesco’s ambition to create a simpler online experience for customers, allowing them to purchase general merchandise, clothing and groceries all in one place.

Approximately 500 staff will be at risk of redundancy. 

Charles Wilson, CEO of Tesco UK & ROI, said: “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.”

Tesco’s Fenny Lock DC was initially closed in 2011 but re-opened shortly after, following a review of operations.