Costco has announced two new developments in its ecommerce offer.
Moving into the grocery ecommerce space with two new services
Costco has frequently been accused of lagging many of its grocery store competitors with a move into grocery ecommerce. However, two new services have been launched this month. It has launched a nationwide, two-day delivery service for non-perishable and sundry items, encompassing around 500 products in total. Free delivery is available for orders over $75. Orders are fulfilled at several of its business delivery centres, and dispatched via UPS.
Expanding same-day delivery partnership with Instacart
It has also expanded its white label, same-day grocery delivery service with Instacart. Currently live in 376 US locations, it offers 1,700 fresh and dry goods items. Under this new program, Costco members have access to promotional prices and cash back incentives, and offers more competitive pricing than previously. A key concern for Costco in moving further into grocery ecommerce is the impact on club traffic. The retailer believes that while it may lose some larger customer trips, they will be more than offset by an increased number of in-fill trips.
25 new clubs planned for the next 12 months
Costco has ended its financial year with 741 warehouses in operation, including 514 in the US, 97 in Canada and 28 in the UK. The retailer opened 12 new locations in the quarter including its first stores in Iceland and France. A total of 28 new units were opened in the year. Looking ahead, Costco plans on opening 25 new clubs, and relocating six. Around two-thirds of new clubs will be in the US, with the remainder in Canada, Australia and Asia. Opening clubs in China continues to be of interest to the business, although no planning permits have yet been secured.
Our view: success through uniformity
It's clear that during a time when other retailers are focusing on shrinking their store formats, localising their offers and driving more personalisation, Costco can deliver success through a relatively uniform global footprint and operating model. However, the retailer is tracking the moves of many of its grocery peer group with two new ecommerce initiatives. It may be late to the ecommerce party, but with both two-day and same-day delivery programs, it will be looking to drive this part of the business much harder than before, although it will be monitoring carefully any impact on club traffic.