Costco is an In-Person Experience Anyways
Costco has this empire of bulk products and it is built upon their business strategy of just getting members in the door. Recently Wall Street has put pressure on Costco to start competing online, which their e-commerce. Costco’s finance chief Richard Galanti said “We want to get you into the store because you’re going to buy more.” As WSJ reporter Sarah Nassauer puts it, Costco’s uses the appeal of a treasure hunt effect. Overall, Costco is doing well, despite their online sales slowing. This is because online only accounts for 4% of their revenue. Even after pressure from Wall Street, Costco seemed nonchalant, noting their current strategy works, so they may never have to up their online game if they don’t want to.
One of the issues Costco faces is the cost of shipping. As UPS and other delivery services are increasing prices for size and weight, this makes it harder to profit off online sales. Costco is getting more aggressive in figuring out ways around some of these problems, such as only selling two packs of large things, so they can turn a profit. Additionally, Costco online is welcome for all. Nonmembers are allowed to buy items with just a 5% increase.
However these must be the same problems Sam’s club and other companies also face. So, why do we think Costco is still hesitant in joining in the game, despite being down low in online profits? Well as for now, Costco evaluated the request, but all in all, decided they were content where they are currently.