Here's why Costco’s e-commerce is growing (COST)

pulse

March 9, 2018 4:26 PM

Costco reported its fiscal Q2 2018 earnings (ended February 2018), posting net sales of $32.28 billion, up 10.8% year-over-year (YoY).

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Costcoreportedits fiscal Q2 2018 earnings (ended February 2018), posting net sales of $32.28 billion, up 10.8% year-over-year (YoY).

The wholesale retailer’s comparable sales were up 8.4% YoY, and Costco’s e-commerce outpaced the company’s overall growth, climbing 28.5% YoY to$1.5 billion. This e-commerce growth is an improvement on the company's fiscalQ2 2017 performance of $1.17 billion and 12% growth YoY.

Costco has been slow to embrace e-commerce, but it has started to take it seriously, and the delay has created easy opportunities for Costco to grow. The wholesale retailer has previously been brick-and-mortar focused, largely because Costco believes, at least as of April 2017, that consumers will buy more when they go to a store.

This belief has likely slowed Costco’s investment in e-commerce, but the company has focused in on it recently with new initiatives. And the fact that it was so behind may be making it easy to improve in the short-term, as there is a lot of “low-hanging fruit,” according to CFO Richard Galanti, giving Costco easy and obvious ways to bolster its e-commerce offerings.

The wholesale retailer has improved various offerings with features that are essentially table stakes for e-commerce in retail, but, because Costco was behind, they're making a huge difference.

Delivery:
offering
Marketing:
Omnichannel:

Catching up to others has worked for now, but with competing wholesalers focusing on digital themselves, Costco will need to keep improving if it wants to avoid falling behind again.