Tesco to introduce fulfilment fees

[Hindsight]

Ha ha , anyone who publishes behind a paywall needs to be treated with caution , just my opinion

Why? What do you mean? I subscribe to The Times and The Guardian. Helps pay for our new friend Isabella. Do you just scavenge off ’free’ news websites? Nought free Bob in life. Those sou4ces will have their funders and their angle.

 

[bobk]

Why? What do you mean? I subscribe to The Times and The Guardian. Helps pay for our new friend Isabella. Do you just scavenge off ’free’ news websites? Nought free Bob in life. Those sou4ces will have their funders and their angle.

Times and Guardian ..... you need help
All my news needs are covered Sky 512 .

 

[matthew]

Doesn’t Jeremy Clarksin have a column in The Times? Maybe he would have a view

I would also point out that every single cost up the chain, is passed back down to the primary producer. We pay them all.

 

[Hindsight]

Times and Guardian ..... you need help
All my news needs are covered Sky 512 .

So you pay The Digger too. Or do you hack Sky?

 

[Macsky]

so let's get this straight...they want us..

to pay...to produce it..inspect it and now sell it

on yer bike tesco....go import it

But they’re saving you from the burden of tax on profits you’d make otherwise, they’re a benevolent bunch really.

 

[Hampton]

@Isabella_fish
And @matthew does mean all of them.
even if we sell wheat or barley, we pay for the haulage to the mills, and we pay for the privilege of using the weighbridge that is owned by the mill to weigh the lorry.
It’s around £8 per load on every load.
When we sell cattle to the abattoirs we pay for grading, classification and disposal of the carcass after they have got the meat. About £13 on every beast.
We even pay for “insurance” on every animal whilst it is in their abattoir in case something happens to it. £3.50 per animal.

we absorb so many of the costs of the processors further up already, and I’d imagine the dairy, poultry and pig segments are even worse.

 

[bobk]

So you pay The Digger too. Or do you hack Sky?

Yes sadly , tried everything to circumvent them to no avail

 

[puppet]

The Coop used to own a group of dairy farms near Leicester, My uncle was their resident vet for a while. They also had some farms and a group grain store near to Coldstream. It was falling to pieces when I last visited it due to lack of maintenance. I understand that it was sold off soon after.

Morrisons took on the 1000 acre farm at Dumfries House (the then Prince Charles helped raise millions for its renovation). They promised to look at genetics, efficiency and sustainability- I suspect with the expectation that the generations of stupid farmers would learn something.
Well, it seems Morrisons learned that they couldn't make it work and only 6 years later abandoned ship. So much for sustainability.
Tesco calculates the cost of production, no doubt from the larger most efficient farms and then sets a price. If they thought farmers were getting a good deal then, just like GP and vet practices, they would be buying them up and running them to form whole areas of UK renamed Tescoshire. But they know they could not make it work financially. To then have the audacity to load fulfillment fees and shelf fees ultimately onto producers takes the biscuit.
I'll offer to sell them a lamb but add some transport costs, market commission, assurance fees and a few square feet of shed space on top. Seems fair to me.

 

[melted welly]

Hello,

I wanted to get in touch about the news that Tesco wrote to suppliers last week explaining it would introduce new Amazon-style 'fulfilment fees' applied to each item sold on Tesco.com, Tesco.ie and through its app to help cover rising online costs.

I am looking for views from farmers views on this -

Could this threaten survival at an already incredibly challenging time? would you consider supplying to other grocers as a result? are you disappointed when you have to absorb your own rising costs?

If anyone has any thoughts they would like to share please do get in touch at [email protected] or DM your phone number if you would like to talk.

I look forward to hearing from you.

Best,

Isabella Fish, Retail Editor, The Times

just an attempt to push another cost downstream in order to support an unsustainable model.

We already pick up various tabs via RT assurance (for no premium) now Tesco also need all growers signed up to LEAF. It’s purely for greenwashing purposes, again we get no premium, but carry all the cost.

I’ve not set foot in a tesco for coming on 15yrs. At the time we were supplying veg, the packer was told he had to pay for the shelf space (£30k/yr). getting an increase of, say, £5/t was like blood out of a stone To put that into perspective, that’s 0.5p/kg in the shop, or 0.25p per 500g pack you buy. Would 0.25p be a deal breaker when you’re filling your trolley?

Then to cap it all off, finally get paid 3 months after delivery.

Consider supplying another grocer? There’s no difference really.

Sell to wholesale? Fresh markets and greengrocers are pretty much extinct. The biggest wholesaler (Booker) is owned by Tesco , so your wee corner shop is in the pocket as well.

We don’t do ourselves any favours as a fairly disjointed collection of individuals, but unfortunately that’s partly the nature of working in relative isolation.

Govt seems more interested in taking land out of production to create carbon trading opportunities (see “emperor’s new clothes”) and nice places for urban dwelling “stakeholders” (voters) to drive to and empty their dogs.

The whole “fulfilment fee” thing isn’t going to stop UK agricultural production or survival, but it’s another cut, along with the thousand other ones that will.

By the time the great and good realise this, we’ll all be done and the next generation will have been well warned off, believe me. .

importing will be fine…….till it’s not. We have the means and the knowledge to sustain ourselves, others may not, but hey ho, not my problem.

 

[Nitrams]

Welcolm to how the supermarket business model works. Gaurentee your margin then flex your muscles to pass on the necessary costs to acheive this. Its absurd, retailing costs are the responsibility of the retailer that is their job, it is in their business interest to retail online so their cost and up to them to balance the cost of online retailing against its profitability and make their own informed descision if it is in its own long term interest. There is no obligation for them to sell this way. Any attempt to successfully pass these costs straight through their hands shows how broken the supply chain is

 

[Nitrams]

Hello,

I wanted to get in touch about the news that Tesco wrote to suppliers last week explaining it would introduce new Amazon-style 'fulfilment fees' applied to each item sold on Tesco.com, Tesco.ie and through its app to help cover rising online costs.

I am looking for views from farmers views on this -

Could this threaten survival at an already incredibly challenging time? would you consider supplying to other grocers as a result? are you disappointed when you have to absorb your own rising costs?

If anyone has any thoughts they would like to share please do get in touch at [email protected] or DM your phone number if you would like to talk.

I look forward to hearing from you.

Best,

Isabella Fish, Retail Editor, The Times

Just as another example of supermarket dominace and influence over agriculture.
Supermarkets will procure a certain amount of direct supply contracts e.g milk, various fresh veg. Not too much but just enough to hit the appropriate marketing angle they wish to portray, you know the stuff supporting dairy industry etc. They will attract producers by paying a small premium over market rate but the condition of approval is a full financial audit into your business. So by procuring say 5-10% of supply direct they have obtained intimate financial information about the industry and cost of production. So armed with this info they can sit at the negotiating table with the processors/packers to procure the remaining 90-95%.
Ask yourself what possibly could a buyer of your produce need your cost of production information for??

 

[Grass And Grain]

Was told that some of the pig producers that were campaigning on telly during the crisis with pigs backlogged on farms were delisted by at least one processor! Also heard that one processor used info on movement info to abattoir to approach third party growers to fatten for there in house pig production company rather than there existing independent farmer.

Not certain, but I've a feeling that was the Morgan sisters, somewhere near Driffield?

They were often on the TV, just spelling out the issues of the industry, and the hardship. Then I'm told they lost their contracts.

This is the problem @Isabella_fish . Farmers daren't speak out for fear of losing what business they've got left.

The control of supermarkets and processors is atrocious.

My own belief is farmers want to do the very best they can for animal welfare, but it's easier if there's money to throw at it. Price squeezes mean more livestock in a building etc. Welfare should come first, and supermarkets should be made to pay a minimum price to ensure there's sufficient profit to provide the highest welfare.

We've also got a terrible health and safety record in agriculture. Safety should be priority with no excuses, but it's harder to achieve if a business is unde financial pressure.

 

[Tarw Coch]

It would be an instant opportunity for a small scale independent shop, the ones the supermarkets have driven out of business.

It needs to be remembered that a lot of small independent shops are supplied by Bookers , who are owned by Tesco

 

[Grass And Grain]

For those interested in the NFU's response:

Minette Batters, president of the National Farmers Union, said: “This move from Tesco is a stark demonstration of the lack of fairness within the supply chain. At a time when crippling production costs mean many farmers and growers can’t afford to continue producing food at scale, resulting in supermarket shortages of fruit, salads and eggs, the food industry desperately needs fairness and collaboration, not further erosion of trust.

“Given Tesco’s approach of trying to railroad suppliers, giving only a few days’ notice, it’s doubly shocking to see the suggestion of repercussions should suppliers not agree to the fee. Many outside of grocery retail might be alarmed at a breach of business trust like this and the NFU has raised the issue with the Grocery Code Adjudicator to investigate whether it breaches the Grocery Supplier Code of Practice.”

When supermarket bully boy buying techniques squeeze prices so far that they've now got empty shelves of some foods, it starts to become an issue of food security, and needs intervention from someone who can act more responsibly.

 

[Devil's advocate]

Of course Tesco is in the wrong with this one.

What would happen though if Tesco increased the price to its Iceberg lettuce supplier by 50%?

 

[onesiedale]

Am I being a bit thick here, but if the cost of fulfilling these orders online is 12p per branded item and 5p per own brand item two things spring to mind;

1- why not charge the customer for the extra cost of fulfilment? It is after all the extra cost specifically dedicated to that customers order.
2- why does an own brand item cost 58% less to fulfill than a branded item?

Tesco are clearly making up the rules to suit themselves and are confident that their market share is large enough for their suppliers to roll over and accept the terms.
The food system is broken. Too much power has been transferred to the retailers and there are too few alternative systems in place to allow people to have real choice of the food they buy, or where to buy it.

 

[Jackov Altraids]

Think there's a massive over reaction to this non story

I think there is a lot to be garnered from this story.
What do we think Mark Spencer said when he met the supermarkets recently about food shortages?
More importantly, what do we think they told him?
Tesco's told WWF to tell the public that food waste was the fault of the farmer rather than them [blatant lie].
Why create fulfilment fees rather than charge more or pay less?
Well when you need to keep up your profits that doubled last year from £1.1 billion to £2.2 billion, every little helps.

 

[delilah]

Yet another 'supermarket' thread. Over 100 posts. 4k views. And not one of you suggest a way forward. How can you, when most of you seem to think that a supermarket is 'a big building'. What a shower.

 

[onesiedale]

Yet another 'supermarket' thread. Over 100 posts. 4k views. And not one of you suggest a way forward. How can you, when most of you seem to think that a supermarket is 'a big building'. What a shower.

Some ways forward;
1- have a strong union that tells it's members they are not to supply the cartel.
2 - have a strong government that legislates against the power that market share brings with it
3 - have strong minded producers who are not driven by the extra penny for themselves, but see the bigger picture and accept that sometimes that extra penny is better invested in a local customer base

....feel free to add some more

 

[delilah]

....feel free to add some more

First things first.
Farmers understanding what it is they are complaining about. Over the weekend there was an absolutely bizarre discussion on here around 'what is a supermarket ?' Read from the point where it was revealed who the culprit was, about half way through.

https://thefarmingforum.co.uk/index.php?threads/supermarket-not-selling-best-british-beef.386495/

The consensus on here is that a supermarket is 'a big building full of aisles and shelves'. So that's what everyone is complaining about. Big buildings are destroying UK agriculture.
It's not just semantics. It's a hugely important point. Until folks agree on what they are complaining about, how can they find a way forward ? If you can't measure it, you can't control it.