Following its long reluctance to e-commerce, Costco have become the latecomer in the Internet operation. The company has been successfully manage its store operation growing. However, a slow growth in second quarter may boost its e-commerce initiative.
For years, Costco enjoyed a stable and steady growth of its retail business. Its quarterly earning reports showed higher growth than competitors, between 7% to 12% in its notable stores.
However economic slowdown and plunge in oil price have hurt Costco revenue. According to Internet Retailer, the revenue from sales only rose 1% from previous year in second quarter this year, after failing short for three consecutive quarters of 1%. While the company's net income fell 8.7% to $546 million.
The company was listed number 11 on Internet Retailer 2015 Top 500 Guide, and a latecomer in e-commerce business. Up to now, Costco stil does not have a system to allow its customers buying online and picking up the goods at store. Although Costco is spending to modernize technology and infrastructure, but the company does not plan to speed up.
Chief Financial Officer Richard Galanti told analyst regarding the reluctance to create online store, "We want to do everything possible to get them in the store and not just come and pick something up," he said as quoted by Bloomberg. While regarding general e-commerce he said, "some out there would argue it's about time. But we're getting to it."
Costco is applying membership-only system for consumers to purchase in its wide selection of merchandise. As the largest membership-only warehouse club in the United States, it may drag Costco's drive to launch its e-commerce operation.
Founded in 1979, Costco now has more than 500 stores in the North America and Mexico, with more than 100 stores abroad. Its international operation has spread to Europe and Asia Pacific, with stores located in United Kingdom, Spain, Japan, South Korea, Taiwan, and Australia.
One of reluctance to engage in e-commerce is the Costco's unique concept which the company called as 'retail treasure hunt.' With its concept, up to a fifth of its stock is limited-quantity items, and only kept in stores for as little as a week.
This unique positioning differentiate Costco in a retail world from Walmart's low prices and Target's cheap chic. Therefore its online store must keep its retail treasure hunt concept as its identity.
Recently, in a further effort to maintain its reputation and retain its employees, Costco raised its minimum wages. As Washington Post reported, Costco boost its minimum wages this year to $13 per hour, an increase of $1.50. The company said that it always reviews its payscale every three years..
As the company experience slow growth in second quarter of 2016, Costco may need to look into e-commerce. However, company's unique concept of retail treasure hunt may bcome the barrier to transform in-store experience to online store.
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