Apparently, Costco doesn’t need ecommerce to bag record profits

Even with a limited ecommerce presence, Costco is delivering its customers the goods.


September 28, 2020

You gotta respect Costco for staying consistent.

As the world turned to online shopping during quarantine, Costco’s ecommerce business barely budged from 5% to 8% of total revenue according to Business Insider (BI).

Even so, the discount wholesaler pulled in a record $4B profit (on $163B revenue) for its full fiscal year as shoppers stocked up on comically large jugs of cashews and other quarantine-friendly goods.

Costco’s digital offering is much less robust than competitors

Here is the competitive landscape according to BI:

  • Target plans to roll out its curbside pickup option to 1,500 stores by year-end
  • Walmart just unveiled its Walmart+ program, which offers free unlimited delivery (a la Amazon Prime)
  • Kroger has partnered with Ocado to build automated warehouses

Costco does offer some grocery delivery and dry goods through a partnership with Instacart. However, it doesn’t do curbside pickup and digital innovation is not a priority.

Shoppers are still happy AF

Costco’s membership-renewal rate hit 91% in its fiscal Q4. As The Hustle has previously noted, the company’s membership model strongly aligns its interests with those of its customers.

And, what are those interests right now (other than America’s cheapest 12-pack of canned tuna)?

Costco’s CFO says customers are redirecting their travel and dining money to “categories like lawn and garden, furniture, mattresses, exercise equipment, bicycles, housewares, cookware” and more.

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