The Grocery Supply Code of Practice (GSCOP) is the guidance that the UK’s largest retailers must follow. To be classed as a designated GSCOP retailer, a company’s UK grocery sales turnover must be greater than £1 billion. The retailers currently included are Tesco, Asda, Sainsbury’s, Morrisons, Aldi, Lidl, Co-Op, Marks & Spencer, Waitrose, Iceland, B&M, Ocado, Home bargains, and now Amazon.
The US-based business currently supplies groceries in the UK through two wholly owned subsidiaries: Amazon EU Sarl and Fresh & Wild Limited.
The legislation is designed to protect food and drink suppliers to major supermarkets from being treated unfairly, to help them understand their rights, to protect and grow their business. Compliance with the Code is supported by oversight from the Groceries Code Adjudicator, who has the power to arbitrate disputes with suppliers, publish recommendations to Designated Retailers, and to impose financial penalties. With an annual grocery turnover in the UK exceeding £1bn , Amazon in now included in GSCOP and can potentially face of fine at 1% of its turnover, including the turnover generated by vendors, sellers and Amazon Web Services – reaching a potential maximum fine of £260 million.
However, Amazon is facing a difficult time complying with GSCOP as the organisation is built on automation rules, while GSCOP relies on relationships and continuous dialogue. In addition, easier compliance with GSCOP will require the change of Amazon practices, particularly if suppliers have to pay to have access to a vendor manager, without channels to resolve payment queries. This is a critical element of GSCOP and one that has been the most successful.
Amazon’s inclusion has been a long time in the making and has been a hot topic of conversations over the last five years. Suppliers have vocally expressed their fear of trading with Amazon as they make very little profit from the online platform but feel that they need to be present on it for brand awareness and to remain visible amongst competitors. GSCOP has the potential to bring more standardised and professional practices to Amazon that theoretically will enable stronger and better relationships. Additionally, more transparency on spend will mean that suppliers will be more prepared to invest in initiatives that drive growth and if Amazon successfully implements GSCOP, it could lead to the organisation revising its supplier framework and agreements in other categories, benefiting the retail industry overall.
At 4C Associates we have trained more than 3,000 people from both suppliers and retailers. We can offer a half-day or full day workshop that includes working through live, current issues. Our consultants can help you create a plan of action to manage any issues and will remain available to help guide you through any issues after training. The workshops are interactive and can be held for between 12 to 16 people at a time.