Tesco to take on Amazon with online marketplace

Tesco is understood to be gearing up to take on etail giants Amazon and eBay with the launch of a ‘marketplace’ on its site enabling individuals and other retailers to sell their wares.

The grocer is expected to launch its marketplace next summer, and is building the IT platform to support the operation at present.

A source close to the situation said Tesco had hoped to launch the marketplace this year, but it was delayed to ensure the platform could be properly tested.

The source said: “Amazon is seen as the golden goose in the online world and Tesco wants a piece of it. Marketplace will allow Tesco to sell more without taking the stock risks as individuals or other businesses will deliver direct to the customer.”

Tesco’s marketplace is expected to operate across all of the grocer’s non-food categories including toys, games, electricals, furniture and clothing. It is understood that Tesco has already had conversations with other store groups and pure-play etailers about selling through its site.

Marketplace will also allow Tesco to offer a wider array of products, including niche lines.

A source told Retail Week: “As with Amazon, a Tesco marketplace will give smaller businesses another outlet to sell through. While Tesco is a competitor to most other retailers, it is too big and powerful to be ignored so it is likely lots of businesses will sign up to sell on its site.”

A Tesco spokesman said: “We consider lots of ideas and are always looking for further ways to give our customers great service and choice, but we don’t comment on rumour or speculation.”

Amazon launched its marketplace in the US in 2000 and its UK arm followed suit in 2002. Consumers and other businesses can buy and sell new, used or collectable items. When Amazon also sells a product, all the items are displayed together.

EBay and Play.com also operate successful marketplaces, and fashion etailer Asos is expected to launch a marketplace this month.

But one source warned that while marketplaces are “unlimited”, the endless choice can be overwhelming. He said: “Asos is doing something different with its marketplace in that it is providing an edited choice of fashion rather than a free-for-all, and that gives it credibility.

“The way to beat Amazon is to do something different, so Tesco might do better by ensuring it has the best edited selection of goods for its launch.”

At the interim stage, Tesco.com reported a 16.1% rise in sales to £1.2bn. The grocer has been ramping up its multichannel operations with the launch of mobile apps, and is considering drive-thrus at its dotcom stores (Retail Week, last week).