Costco May Cancel This Customer Perk, CFO Says
Costco was late to the curbside pickup game, launching a test of the contactless delivery service at three of its warehouse locations in New Mexico in March 2021—well after many grocery stores has already implemented the perk due to the pandemic. While originally optimistic about its curbside pickup offering, Costco's leadership is now implying they may soon be abandoning the service.
In a recent earnings call, Costco's CFO Richard Galanti said of curbside delivery: "The utilization of it, when we first did it, we marketed a little bit. The utilization has not set the world on fire in terms of where it's trending."
Still, Galanti said the service is "still a test" at the three New Mexico locations. But, it seems Costco is much more concerned about the areas in which it's seeing success. For instance, sales for the beloved warehouse were up 38.2% recently, with about 45% of Costco members making online purchases of some sort during the first few months of the year. The hot ticket items? Lots of "big and bulky orders" of products like home furnishings being made through Costco Logistics, which delivers and installs items purchased on Costco.com.
Galanti said Costco is working to improve the delivery time of this service from up to two weeks to five to seven days. But, analysts argue that Costco is still behind other online retailers like Amazon.
"Costco is winning with its nationwide network of physical stores but lacks a compelling digital storefront and connected presence online," Sean Turner, the CTO and co-founder of Swiftly, told Winsight Grocery Business. "Costco needs an effective and cohesive digital strategy that combines all the different ways shoppers can purchase from Costco, (online and in-store), and includes the value and savings that shoppers can find by making a trip to the warehouse that makes Costco unique."
That said, the warehouse chain recently announced that face masks are no longer required in stores for members who are fully vaccinated. Shortly after, the warehouse said it would be bringing back food samples, churros, food court seating, and even condiment stations (with the onion crank). All of these in-store perks are just more reasons why members may want to shop in-store… which gives Costco less incentive to continue its curbside pickup testing or improve its online experience.
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