Tesco to revisit the marketplace model.
Tesco is to launch an online marketplace offering goods from third-party sellers alongside its own ranges thereby following a route taken by other retailers in recent years as they have looked to better monetise the traffic to their sites.
The grocery company has been advertising positions in the business for people to help it build-up its range of sellers for the marketplace, which is understood to be pencilled in for an official launch early next year. The targeted sellers are to be focused around the manufacturers of non-food categories such as pet food, health & beauty and alcohol. The brand owners will fulfil the online orders directly from their own warehouses rather than through the Tesco infrastructure.
The company has been working on the underlying technology for the marketplace for some time. It will be a very different proposition to the last time Tesco operated a platform for third-party sellers over a decade ago. This previous online marketplace ran as Tesco Direct and was focused on the sale of non-grocery goods from third-party sellers. It was closed down in 2018 after the company admitted that it could not see the division hitting profitability.
It was run completely separately to the core online food business Tesco.com. The new marketplace will be very different as the goods will be fully integrated into the food site and sit alongside the core range. This very much reflects the well proven approach pioneered by Amazon, which has since been copied by many other retailers around the world.
It has been particularly prevalent in the fashion sector where the likes of Next, Asos, Boohoo and Zalando have all looked to build-out their offerings beyond their own ranges. However, it has not just been the fashion players recognising the upsides of marketplaces because DIY chain B&Q also took this approach with a launch in 2022 offering customers an expanded choice of over 300,000 products from more than 400 verified sellers.
Products initially included an expanded selection of wallpaper, lighting, and power tools. The range of products has since been expanded to include a number of new categories including cookware and tableware. Since its launch the number of products offered has increased eight-fold and B&Q’s marketplace now accounts for a quarter of the company’s total e-commerce sales. Such numbers would undoubtedly be very welcome to Tesco when it comes to launch its venture in 2024.