The recent revelation that Tesco has been selling goods on Amazon’s site under the name Oakwood Distribution at prices that undercut its Tesco.com website is hardly surprising [This is Money article]
The brouhaha seems to surround it doing so in a name other than Tesco. Anti-Tesco campaigners cite this as an example of the company’s sharp practice. This is not really the case. What would have been really suprising would have been if Tesco had been using its own name to sell through Amazon.
Goods have been sold this way for many years by all manner of operators – big and small. That’s why the likes of Lastminute.com and now Amazon and eBay have flourished.
Players like Tesco, the hotel chains, airlines, and clothing brands can offload specific goods at cheaper prices on these sites than through their own businesses without apparently damaging their brands and/or their credibility.
For the likes of Tesco it is beneficial to have these various routes to market for its goods – should it want to get rid of a block of products at short notice for example or sell end-of-line goods. Yes, it also enables it to sell standard products cheaply while maintaining higher prices for these same goods on its own website and in its own stores, but what exactly is wrong with that?
The nub of the issue is that in this increasingly multi-channel age Tesco and other retailers are recognising the importance of offering consistent pricing across all their channels – whether that be in-store, online or via mail order. If they want to sell specific number of goods down a certain channel at lower prices then use a third-party like Amazon.
With the likes of Click & Collect and 90-minute deliveries playing increasingly big roles the need to shift stock across various channels is becoming ever more important for retailers. But keeping a handle on this stock – ideally via a single view – is proving a tough task for retailers.
If you threw in having a variety of prices for the same product in each channel then the whole picture becomes even more complicated.
Consider a customer buying a product online at one price and collecting it in-store where it is priced differently, and then to top it all refunds are required. The complexity of managing that stock and its pricing would be a headache for sure. Such hot topics will undoubtedly be under discucssion at the forthcoming Internet Retailing Expo on March 21-22.
Tesco was probably foolish to defend itself by lamely suggesting it was widely known that Oakwood Distribution was part of the group. But as far as flogging goods at a lower price on Amazon – what’s the big deal and where’s the problem?