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Costco grows digital business, deliveries and in-store pick-ups

The membership warehouse isn’t sleeping on its digital business, with ecommerce sales growing 18.9% in the last quarter.
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While Costco may be known for its massive warehouse stores, the membership club continues to grow its online business, and it’s ramping up deliveries and pick-ups in the process.

Comparable e-commerce sales were up 18.9% last quarter, compared to a more modest 5.4% bump in comparable sales overall. These gains were partly fueled by sales of gold bricks, which along with silver coins generate $200 million in sales per month, but CFO Gary Millerchip told analysts on Thursday that other items are gaining traction online as well.

“While continued strength in bullion was a meaningful tailwind to e-commerce comps, appliances, health and beauty aids, tires, toys, gift cards, hardware, housewares, home furnishings, optical, and pharmacy all grew double digits year over year,” he said.

Other measures showing momentum in Costco’s digital business include a 29% jump in new app downloads; an 8% increase in site traffic; and a 17% increase in Costco Logistics deliveries. There were 3.5 million app downloads in the quarter, and following an upgrade to its native search function, click-through rates doubled.

The compounded annual growth rate in e-commerce was more than 20% over a 10-year period, Millerchip said. “It’s been a significant growth story for us and members clearly evaluating the additional ways in which we’re giving them opportunities to find new deals and value for the member.”

The benefits of bulky items: He also highlighted that the rollout of buy online and pick up in store for TVs was completed last quarter. He added that this offering isn’t cost effective for lower-priced items, but high-value items such as TVs—and soon laptops—offset the higher labor costs.

As for shipping directly to customers, CEO Ron Vachris said Costco Logistics delivered more than 4.5 million items over the last year. “We have great momentum with this business and expect big and bulky items will be a key part of our continued progress with e-commerce in the coming year,” he said.

Retail news that keeps industry pros in the know

Retail Brew delivers the latest retail industry news and insights surrounding marketing, DTC, and e-commerce to keep leaders and decision-makers up to date.

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