Costco Dominates Brick and Mortar Sales

With recent reports and analysis about Amazon Prime’s popularity and dominance cutting in to Target and Walmart sales, Costco has largely remained out of the discussion. One reason, as pointed out by finance reporter Grace L. Williams, is Costco’s free samples and loyal customers. This might seem petty, but Williams makes some good observations which are backed by market numbers.

 

First, Costco’s numbers are strong and the company still has room for growth, particularly overseas. Next, although more Costco members are also Prime members, they use the different sellers’ services for different reasons. While Prime offers speed and convenience, Costco offers an experience. A trip to Costco might suck up a good portion of a weekend, but the experience of getting one’s hands on goods, and the opportunity to sample offerings is an experience that an online company is incapable of providing. Plus, while Amazon still receives a good portion of activity during the holiday season when consumers are especially concerned about prices and savings, Costco is a steady supplier of necessities throughout the year. Plus, Costco membership is cheaper and considered a good value.

 

One number worth noting is the percentage of small business owners who renew their Costco memberships, 94 percent. The number of non-business owners is still strong, at 88 percent. But the high number of small business renewals, and the fact that these owners spend 20 to 30 percent more than non-small business consumers at Costco, indicates that Costco is beating Amazon on that front. Costco is a unique niche as a wholesale retailer. Small businesses owners have come to rely on the store as a part of their supply chain, a position that can’t be filled by Amazon Prime or Target. Furthermore, a drone can only carry so many rolls of paper towels.