Daily Insights

The Power of Costco

By: Alizah Asif Farooqi | Jun 13, 2019

Costco is on the come-up of e-commerce. Digital may be the default for many brands at this point, but the original warehouse club is just beginning to sort out its online strategy. Here’s what could be behind Costco’s decision for digital advancement.

In the past, Costco has been a bit slow on the digital uptake. But though the brand’s mobile performance is lacking overall, it did see success in its partnership with Google Express according to Gartner L2’s Digital IQ Index: Big Box. Google Express now has relationships with several of the largest retailers in the U.S.—including Costco—and offers several advantages for the retailer such as fast fulfillment and integration with its loyalty program, which Costco has integrated with the service. While sales data has not been forthcoming from Google Express, overall site traffic for partnered retailers spiked in July to 30 million visitors, before falling in August to 17 million visitors.

The bulk retailer is now kicking things off for itself with the addition of lockers to its stores to make buy-online-pickup-in-store more efficient. That said, Costco is also stocking up on seasonal items online, like Christmas decor in the summer and patio furniture in the winter, as it’s now realizing that items that typically have a limited shelf-life offline live a lot longer online. In fact, during the store’s third-quarter fiscal year 2019 earnings call last week, it reported that e-commerce sales were up 22% year over year.

Indeed, Costco’s website seems to be the focal point of its new attitude toward digital progress. By prioritizing site over store, Costco might be able to dial up online sales, which still only make up about 5% of its overall sales. Given that the brand has built a name for itself based on being a land of plenty and a place where everything, ironically, becomes an impulse buy, it makes sense that the brand would want to harness its power and share the wealth and excitement year-round with the online lot as well as the offline shoppers. Though Costco’s digital embrace is long-awaited and much welcomed, time will tell if it’s better late than never—or just late.