Tesco has launched an online marketplace, allowing customers to buy thousands of third-party products in addition to their groceries.
When the market reaches its full size, Tesco.com will make Tesco.com “a one-stop shop for everything customers need,” the supermarket said.
Today is the first launch of the marketplace [Tuesday 4 June] sees around 9,000 products listed across categories including garden, DIY, homewares, toys and pet care. Products appear alongside Tesco groceries on Tesco.com and the Tesco app, but are handled directly by the supplier.
“Ultimately it all comes down to giving our customers access to more than we offer,” Peter Filcek, marketplace director at Tesco, told The Grocer.
“We looked at customer searches on our websites and came across things that we just don’t offer at Tesco [stores] or online, and that started a flurry of thoughts about what we could do to unlock that offering, to give customers what they were looking for, because they were really looking for all kinds of things.”
For example, last week the search term ‘no results’ on Tesco.com was suitcases. Suitcases are available on the site from today.
“We are now able to meet truly quantified customer demand in a way that we could never mobilize a retail supply chain for. So we go where the customers tell us to go, where the opportunities are,” said Filcek.
How the Tesco marketplace works
There will be around 17 retailers in the market at launch – all of whom have been vetted “to ensure they meet our robust requirements and standards”, Tesco said. Several household brands are now available, including Tefal, Silentnight, Tommee Tippee and Charles Bentley.
The sellers are continuously monitored based on factors such as delivery speed, returns and delivery success rates, and soon also metrics such as customer ratings and reviews.
Shoppers pay for third-party items separately from their grocery store, while marketplace items have their own separate delivery fees. For Anytime Delivery Saver customers, or if an order with the same seller is over £50, standard deliveries are free. Shoppers can earn Clubcard points on all purchases. Items are clearly labeled as coming from third-party sellers.
Filcek said the market’s supply and supplier base should “increase rapidly over the summer” and scale up “as quickly as we want.”
“We want to be big enough to be a destination – so that you have critical mass and credibility in each of these categories. But not that big [shoppers] eventually stumble over irrelevant things and it becomes a problem and creeps in [their] way. “We also don’t want to chase numbers if it means bringing in vendors who can’t deliver on the promises we make to our customers, or who let us down in terms of ongoing compliance, or who have problems down the line,” said he.
“So it’s definitely going to get bigger, but it’s going to get bigger at a pace that we’re comfortable with and that we know is the right thing for our customers,” Filcek added.
The retailer is said to have been working on the technology that supports the market over the past two years. The launch follows a pilot phase with Tesco colleagues over the past few months, to test and learn how customers would use the platform. The Grocer was first to report that the supermarket was ready to launch in October, building out a team responsible for recruiting vendors and working with them on “assortment, merchandising and promotional strategies.”
A job advertisement for the role at the time said the marketplace is a “key pillar” of Tesco’s strategy to be ‘easily the most convenient’ grocer – a strategy set out in late 2021 to serve customers ‘where, when and how they want ‘. are served”, where online plays a major role.
TescoDirect 2.0?
The marketplace model is not new to Tesco, which opened its non-grocery offering Tesco Direct to third-party sellers in 2012. Tesco Direct ceased trading in July 2018, with the company saying there was no prospect of the loss-making group becoming profitable. In addition to the loss of hundreds of jobs, the closure caused about 300 merchants to lose a small but solid sales channel.
Analysts argued that Tesco Direct was too protectionist when it came to the sellers it was willing to accept, and too cautious about offering products that could compete with its own.
“Things have moved on since Tesco Direct,” says Filcek. “Our online business is significantly different than before. We currently ship 1.2 million orders per week and in that time we’ve invested and iterated into our retail platform, into our online shopping experience, and that’s where we layered the marketplace.
“Tesco Direct was a separate website, with its own login, completed by Tesco. This is fully integrated into our dotcom shopping experience and shipped by the merchant. So a much simpler shopping experience, much more organic and easier to discover, but also a much more scalable business because everything comes from the merchant,” Filcek added.
More recently, Tesco launched an online marketplace – Tesco Exchange – allowing suppliers to save costs and reduce food waste by selling or donating excess stock to other manufacturers. The service, which launched in November, is available to more than 3,500 Tesco suppliers. However, no direct sales take place on the platform, but agreements are made privately between buying and selling parties.
Other supermarkets and retailers have launched marketplace models, including Walmart, Kroger, Auchan, Carrefour, Ahold Delhaize and Boots.
When asked whether Tesco.com will now compete with Amazon, Filcek replied: “There is a difference”.
“What we do at Tesco is really focus on what we think Tesco shoppers want, and try to find the line between scale, quality and trust. Our launch is nowhere near the scale of Amazon. We really try to make sure we hit those numbers in terms of performance, quality and trust, and that will always be our guardrail, it will always be our watchword,” he said.
“We have no ambition to copy anyone else. Basically we’re trying to do something unique and find the balance between an established grocery company and a multi-channel marketplace that offers what you’re looking for at the likes of Tesco, but that doesn’t go down to the last detail. , does not sacrifice ease of experience or confidence in a quest for scale.”