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22 May 2018, 16:11 | Updated: 22 May 2018, 16:21
Tesco says some 500 jobs are at risk as it shuts its Tesco Direct website; 300 jobs are based at the Fulfiilment Centre at Fenny Lock in Milton Keynes.
The decision follows a detailed review into the business, which Tesco said faced "a number of significant challenges" including high fulfilment and online marketing costs.
Tesco said it "concluded that, despite its best efforts, there is no route to profitability for this small, loss-making part of the business".
Tesco Direct will cease trading on July 9 and the group will also close its fulfilment centre at Fenny Lock in Milton Keynes at the end of August.
Charles Wilson, Tesco's chief executive for the UK & Ireland, 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."
The news comes on the same day that Marks & Spencer announced that it is to swing the axe on over 100 stores, putting thousands of retail jobs at risk.
Joanne McGuinness, national officer for the Usdaw union, said:
"This is devastating news for Tesco Direct staff.
Usdaw officials and senior reps will now enter into consultation talks with the company where we will look closely at the business case for the proposed closure.
Our priorities will be to support, advise and represent our members through this difficult period, and to get the best possible deal for them."
Tesco Direct sells a range of general merchandise, including homeware, tech, toys and clothing for collection or delivery.
The company said it is "committed" to bringing general mechanise to customers but said it planned to do so through a single online platform.
Tesco assured there were no changes to its home shopping service, Tesco.com as a result of its announcement.