Costco cannot be considered a digital pioneer. Its website, while much improved in recent years, has never been a major focus for the chain.
This is because the technology is expensive and the warehouse club has always been very careful about investing in anything that takes away its ability to keep prices low.
costco (COST) , however, has been very smart in its digital partnerships. Its deal with Instacart, for example, gives members access to same-day delivery without the warehouse club having to develop that service itself.
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Additionally, Costco has found smart ways to offer fast service and fulfill online orders.
Digital sales are clearly an area of potential growth for the company, but equally clear is that they will not follow the traditional model.
Retailers like amazon have huge fulfillment centers and supply chain networks that cost them billions to build. It's essentially a never-ending investment as Walmart and amazon, along with Target to a lesser extent, try to get faster and faster deliveries of even more items.
Selling hundreds of millions of items from your own warehouses requires a lot of money. That's not Costco's way, but the company has found a way to offer its customers more expensive items at similar prices to Costco without adding a lot of expenses.
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Costco has new website
Many Costco customers don't visit its main website, so they may not even realize that the company has a second site, CostcoNext.com. And even if you've been there, it's not very clear what you're looking at unless you click on the About Us tab in the top right corner of the page.
There, the company explains what it intends to do with its new site.
“Costco Next features a selection of limited products from some of Costco's most trusted suppliers,” explains the warehouse club. “Designed to complement our inventory and quality standards, Costco Next features suppliers and products that have been carefully selected by our shoppers for their merchandise quality and exceptional customer service. So you can feel confident shopping, knowing you are choosing products from brands you can trust.
The genius of the business is that while Costco makes selling easy, it never touches any merchandise.
“While shopping at Costco Next, you'll have the opportunity to purchase products directly from a Costco Next supplier's site, where you'll enjoy special members-only values,” the company added. “This innovative approach helps us achieve our goal of offering a broader selection of products to our members, while increasing the value of Costco membership.”
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Costco has big plans for Costco Next
Richard Galanti, Costco's recently retired CFO, spoke about the new website during the company's presentation. second quarter results callhis last with the brand.
“A couple of comments about the seller platform. This, costconext.com, allows our members to have exclusive access to direct-to-consumer sites for high-quality brands at affordable Costco prices. Currently, there are about 70 brand sites Costco Next. with 15 additional sites in development,” he said.
All of those “sites” are essentially aggregated merchandise that Costco members can purchase, with the company being strict with its members and making sure those members offer warehouse club-style pricing.
“We'll probably end this calendar year with about 90 sites and continue to grow from there,” Galanti said. “Costco Next offers everything from home improvement to clothing, pets, home, kitchen, electronics and accessories, plus sports, bikes and toys. You should check it out. It's a pretty good site.”
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Costco Next is part of a broader effort to improve the company's digital offerings.
“Progress continues to be made in our e-commerce, mobile and digital efforts… In February, we launched our new native mobile app landing page on iOS. The native landing page now loads in less than two seconds, in compared to eight seconds earlier,” added the now-retired CFO.
