Costco, the American warehouse-style chain store popularly known as “好市多” or “開市客” in Chinese, has a massive membership base and extensive sales channels, earning accolades for its unique business model within the industry. Costco has always focused on providing its members with a delightful in-store shopping experience, turning each visit into a treasure hunt for its members.
Currently, the warehouse club is rolling out an unexpected service that is expected to please its members. Costco’s business philosophy revolves around building stores that resemble simple warehouses. They do not splurge on fancy product displays, mainly to keep costs low. Instead of aggressive marketing, Costco thrives on cost-cutting to offer high-quality products at discounted prices, attracting customers through value.
Despite members enjoying the thrill of “treasure hunting” at Costco’s physical stores, with competitors in e-commerce expanding rapidly and offering convenience, Costco has ventured into online shopping. They have partnered with Instacart to provide same-day delivery services and continuously enhance their website services.
Traditionally, Costco maintained separate inventories for its online and in-store products. However, according to financial news site TheStreet, Costco is introducing a new online feature that will revolutionize the digital shopping experience for members. This initiative aims to draw customers to physical Costco stores while also enabling them to make purchases from the comfort of their homes.
During a second-quarter earnings conference call on March 7th, the then Chief Financial Officer of Costco, Richard Galanti, revealed an unexpected change in services that the company’s website would soon provide. Galanti mentioned that one imminent change was the online inventory display of products available in physical stores. Although it may take a few months to implement, it will soon become a reality.
Galanti explained the benefits of showcasing store inventory online. He highlighted that if a member wants to buy a specific product online and that product is available at a store they frequently visit or a nearby location, the member will be informed and can choose to purchase it from there.
While members who prefer not to visit physical stores can order items online, there is a significant reason why many members may opt to shop at the store itself. Galanti emphasized, “In many cases, it may be cheaper to shop in-store because online costs may be higher, especially for non-food items.”
Although Costco has mainly focused on in-store sales by offering complimentary snacks to lure members for their treasure hunt experiences, the company has also been investing in e-commerce. This includes selling items not typically available in physical stores.
“Electronic commerce has performed strongly in various areas, with sales of gold and recently silver leading the way. Additionally, sales of appliances, gift cards, and e-tickets have also been very robust,” Galanti stated.
The growth in Costco’s online sales can be attributed to their improved visibility. Galanti noted that in the past few months, compared to traditional competitors, Costco has excelled in articulating the significant value propositions they offer in major product categories to members.
“We have communicated with members on what prices cover in categories such as household appliances, tires, televisions, computers, and mattresses,” he added.