Costco Announces Two E-Commerce Services to Compete Against Amazon and Walmart

10:03 10/09/2017

COST  unleashed two new delivery services as it gears up to compete against Amazon and Walmart for internet food dollars. Richard Galanti, Costco CFO, said, “Through Costco Grocery, customers can order from a selection of just under 500 nonperishable foods and sundries and have the items delivered to their homes in two days or less, with free delivery for orders above $75.”

Costco is securing a partnership with startup Instacart for same-day delivery of about 1,700 fresh and dry items which is currently available at 376 U.S. Costco locations.

BMO Capital Markets Corp. analyst Kelly Bania stated that this is a “huge positive” for Costco because they have been slow with adapting to transformation and advancements of digital marketing. She also weighed in her opinion, “We also see risk these initiatives will weigh on margins over time an may be viewed as defensive.”

The biggest challenge Costco faces with this expansion is “figuring out how to communicate” its affordable online prices to customers. Costco expects this new service to increase the engagement with millennials as digital technology is significantly increasing in our time.

Last year, competitor Walmart, bought for $3.3 billion as it planned to attack and improve their e-commerce division. Amazon just announced a new delivery service of their own last week and earlier in the year they purchased Whole Foods for $13.7 billion.

In the quarter ending September 3, Costco’s e-commerce sales increased by 21% year-over-year (which was an 11% increase from last quarter). Sales of $129 billion exceeded analysts’ expectations.

This article has been provided by a Chasing Markets contributor. All content submitted by this author represent their personal opinions, and should be considered as such for entertainment purpose only. All opinions expressed are those of the writer, and may not necessarily represent fact, opinions, or bias of Chasing Markets.
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