High online marketing costs blamed for Tesco Direct downfall

High online marketing costs blamed for Tesco Direct downfall

Tesco has blamed on elevated costs for online marketing and fulfillment for the closure of its loss-making Tesco Direct website, overshadowing 500 employees with a cloud of uncertainty.

Best known for its grocery offer, Tesco had also vainly sought to challenge the likes of Argos and Amazon by branching away from food products to the likes of sofas, games and TVs. But it failed to make any headway toward profitability since the launch in 2006.

Run in parallel with Tesco.com, the household goods and clothing arm will cease trading from 9 July and will include the closure of a number of distribution centres dedicated to the fulfilment of orders.

Commenting on the move Tesco UK chief executive Charles Wilson commented: “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.

"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.”

Tesco has cut its cloth under the jurisdiction of Dave Lewis, who has unpicked much of the ill-fated expansion undertaken during the tenure of his predecessor, Sir Terry Leahy, to refocus on its core grocery business.

The Tesco Direct website was created by DigitasLBi.

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