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Costco Doubles Down on Ecommerce With Pickup Locker and Marketplace Expansions

Costco will put a renewed emphasis on ecommerce by doubling the number of locations with pickup lockers over the coming year and expanding its Costco Next brand directory. The retailer’s net sales were up 16.7% to $49.4 billion in Q1 2022, with digital sales up 13.3% year-over-year.

Currently, 112 Costco warehouses have pickup lockers, according to CFO Richard Galanti on a call with investors. The expansion will bring them to more than 200 stores, though Galanti did not provide an exact target for the expansion.

Costco also will build on its ecommerce momentum with the expansion of Costco Next, a curated selection of limited-supply items that shoppers can purchase directly from the retailer’s “most trusted suppliers.” The marketplace is arranged by supplier to let shoppers pick and choose the specific brands that interest them, though shoppers can still choose to shop by product category if they prefer.

Costco Next has existed since 2017, but the retailer is expanding its selection to include new brands. Prices are 20% below the standard cost on average, which simultaneously provides an incentive for Costco members to stay with the retailer and gives a reason for customers to browse for deals online, according to CNN.

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Offering the option to order directly from suppliers also may help Costco navigate the supply chain crunch. Galanti noted that 79% of the retailer’s import containers are late by an average of 51 days. The retailer has been working around the issue, though “some inventory won’t make it before Christmas, but we’ve mitigated that as best as possible and feel pretty good about it,” said Galanti.

Ecommerce is still a small part of Costco’s overall earnings, averaging between 8% to 9% of total sales, but the retailer is continuing to build its capabilities and make the digital experience as smooth as possible. Other recent ecommerce innovations, and plans for the near future, include:

  • Adding same-day grocery delivery in Texas through a partnership with Uber;
  • Making it easier for members to reschedule ecommerce deliveries, returns and pickups;
  • Improving labels on fulfillment options to let shoppers easily determine what is available where, including whether nearby warehouses have the right number of a particular item in stock; and
  • Rolling out ecommerce kiosks with video signage and touchscreens that can be used to place orders in-store.

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