Distribution channels and supply chain of Tesco
This article aims to examine the distribution channels and supply chain of Tesco. It explores how Tesco acquires products from its suppliers to sell them to the consumers. Tesco is the market leader in the UK grocery and supermarket industry. It is also one of the largest retailers in the world. It is headquartered in Hertfordshire, the UK.
Distribution channels of Tesco
Tesco uses two main distribution channels i.e. online and offline. It has thousands of stores operating in the UK and abroad. These stores are of different types i.e. Tesco Express, Tesco Metro, Tesco Extra, Tesco Compact, Tesco Homeplus and Tesco Superstore. Customers wishing to purchase anything from the company may pay a visit to any of its stores. Most of the stores are open between 6am and 10pm which gives its employees enough time to restock the shelves. However, it is worth noting that managing so many stores worldwide is expensive.
Tesco also sells its products online via its official website. Customers need to open an online account to use its delivery service. Upon purchase, Tesco delivers the products to the doorsteps of the customers. In the UK, it currently has a flat pricing structure i.e. one-hour delivery slot costing £4.50. However, this pricing structure has angered some customers who used to rely on getting the cheapest delivery slots costing £2 (Mason, 2020). It is worth mentioning that Tesco has a different pricing structure in Ireland i.e. an upfront monthly subscription starting at €7.50 a month (Tesco, 2020).
Tesco’s online distribution channel has been a very good success recently. More customers are turning to its online platform and therefore, it had to increase its delivery capacities (BBC, 2020). Online sales contributed immensely to the profits of the company both in the UK and Ireland.
Supply chain of Tesco
Tesco works with thousands of suppliers and partners around the world. These suppliers grow, manufacture, and package products for the company. Tesco has 23 warehouses across the UK. These warehouses are for the storage of products received from the suppliers before they are distributed to various individual Tesco stores in the UK.
Tesco works very closely with its suppliers to improve its supply chin efficiency and increase supplier satisfaction. However, it is worth mentioning that the company was found in 2016 delaying payments unreasonably to suppliers to improve its own financial positions.
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Last update: 22 November 2020
BBC (2020) Tesco profits surge as online orders double, available at: https://www.bbc.co.uk/news/business-54445399 (accessed 10 November 2020)
Mason, C. (2020) Tesco axes cheap grocery delivery and collection slots, available at: https://www.moneysavingexpert.com/news/2020/08/tesco-customers-voice-anger-after-delivery-cost-changes—what-y/ (accessed 10 November 2020)
Tesco (2020) Tesco Careers, available at: https://www.tesco-careers.com/office/supply-chain-logistics-and-customer-fulfillment/supply-chain/ (accessed 12 November 2020)
Author: M Rahman
M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.