Tesco is axing its standalone clothing and general merchandise website after concluding there was “no route to profitability” for the business.
The shock move to close Tesco Direct has put around 500 jobs at risk.
The supermarket giant said the “loss-making” arm had “faced a number of significant challenges” including high costs of fulfilment and online marketing.
Tesco added that the headwinds had “prevented it from delivering a sustainable offer as a standalone non-food business”.
Following the move, Britain’s biggest retailer plans to shutter its warehouse at Fenny Lock, near Milton Keynes, which handles Tesco Direct orders.
The website will cease trading on July 9.
However, Tesco said it “remains committed” to selling general merchandise in store and through Tesco.com.
It said the move to axe a separate Tesco Direct website would “create a simpler online experience for customers, allowing them to purchase general merchandise, clothing and groceries all in one place”.
Shoppers can already purchase toys, homewares and cookware through Tesco.com.
The grocer’s UK and Ireland boss Charles Wilson said: “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.
“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.”
Joanne McGuinness, natonal officer at shopworkers’ union Usdaw, described the move as “devastating news” for Tesco Direct staff.
She added that Usdaw officials would enter talks with Tesco to “look closely at the business case for the proposed closure” and said the union’s priority would be to “support, advise and represent our members through this difficult period, and to get the best possible deal for them”.