Tesco will close down its general merchandising website Tesco Direct on July 9 after determining there is no way to bring it back to profitability.
The move, which will force the closure of the fulfillment centre at Fenny Lock which handles orders, puts 500 jobs at risk. It does not affect the main supermarket’s website, tesco.com, which will continue to sell food products as usual.
‘Tesco has 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,’ the supermarket said in a statement.
Closing down: Tesco Direct, which sells non-food items, will shut down on 9 July
It said Tesco Direct, which sells electricals, toys, furniture and other non-food items, had faced a a number of ‘significant challenges’.
These include ‘high costs’ for fulfilment and online marketing, which have prevented it from delivering a ‘sustainable offer as a standalone non-food business’.
The announcement comes as retailers struggle to compete with internet giants like Amazon.
Some of the products sold on Tesco Direct will be sold on Tesco’s food website and a ‘large range’ of items will continue to be available in store too, the group said.
Charles Wilson, Tesco’s UK and Ireland boss, said: ‘We want to offer our customers the ability to buy groceries and non-food products in one place and that’s why we are focusing our investment into one online platform.
‘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 said customers will be able to place an order on Tesco Direct until 9 July but from today, they won’t be offering next-day delivery. Instead, orders will take 2-5 working days to arrive.
Vouchers, ecoupons and gift cards will be accepted until 9 July, subject to the usual terms and conditions, the supermarket group said.
Joanne McGuinness, Usdaw national officer, said: ‘This is devastating news for Tesco Direct staff. Usdaw officials and senior reps will now enter into consultation talks with the company where we will look closely at the business case for the proposed closure.
‘Our priorities will be to support, advise and represent our members through this difficult period, and to get the best possible deal for them.’