Tesco launches online marketplace to rival Amazon

Saving and Making Money

Updated on 18 April 2012 | 8 Comments

Tesco has opened up the Tesco Direct website to third party retailers.

Tesco is now allowing other retailers to sell goods on the Tesco Direct  website. This appears to be a move to compete with Amazon’s ‘marketplace’ offering.

The service made a quiet debut earlier this week and was spotted by the tamebay website. Today it was officially announced as part of Tesco's end-of-year financial results.

At this point, it’s still not clear how many other retailers will be selling on the Tesco site but Maplin and Crocus, the garden website, have already been spotted.

The move is an exciting development as it should increase competition in the online retail space.

Tesco’s big online advantage is its ‘Click and collect’ service. This allows you to order non-food goods from the Tesco website and then collect them from your local Tesco store.  Currently, more than 770 Tesco stores are part of the scheme and collection points will be introduced at a further 700 stores over the next year. There are also 45 stores that offer 'Click and Collect' for grocery items and that number will grow as well.

The company said in January that its UK business wasn’t performing as well as expected and that profits would be affected. One reason for the poor performance was that sales of non-food goods at Tesco’s big hypermarkets have been hit by online competition, so it makes complete sense that Tesco wants to strengthen its online offering in this way.

Tesco said today that it was going to spend less money on new hypermarkets and invest more in its online offering as well as refitting its existing stores. Staff levels in stores will also be increased.

It'll be interesting to see whether Tesco's recent problems are just a short-term blip or the start of a longer decline. Investing in online makes it more likely that the retailer can turn things around quickly.

More: Tesco launches money-off voucher scheme  |  Why I'm boycotting Amazon and where I'm going instead

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