Costco Digital Innovations Fuel 22.6% Online Growth

Costco is seeing measurable benefits from its latest digital initiatives both in-store and online, Costco President, CEO and Director Ron Vachris said Thursday (March 5).

“In digital, we continue to make strides with our roadmap to deliver a more seamless experience for members in warehouse and online,” Vachris said during an earnings call.

During the quarter ended Feb. 15, Costco saw its net sales grow 9.1% to reach $68.2 billion, according to a Thursday earnings release.

Its total company comparable sales increased 7.4%, while its digitally enabled comparable sales increased 22.6%, per the release. Costco defines “digitally enabled” comparable sales as those that are initiated through a digital device, whether they are fulfilled through a warehouse, a distribution center or Costco-Travel.

Other metrics were up as well during the quarter, according to a presentation released Thursday. Traffic rose 3.1% and paid memberships grew 4.8% to reach 82.1 million.

Costco added three warehouses during the quarter and expects to add 28 during the current fiscal year, which will lift its total number of warehouses to 942, per the presentation. The company aims to add 30 or more stores per year in the coming years, Vachris said during the call.

“In the warehouses, we are achieving meaningful improvements in speed of checkout and employee productivity, both as a result of our mobile wallet enhancements, pharmacy pay ahead and the rollout of employee pre-scan technology,” Vachris said.

Costco is piloting automated pay stations that allow members to pay for their pre-scan orders in around eight seconds, and it has received great feedback from members, Vachris said.

Among digital metrics, during the latest quarter, total app visits leapt 63%, eCommerce site traffic rose 32% and eCommerce average order value rose 15%, according to the presentation.

Digital enhancements introduced during the quarter included an expansion of carousels for personalized shopping experience, additional personalized marketing based on browsing history, and modernized product display pages, per the presentation.

“On our digital sites, we continue to roll out new personalization capabilities, which are resonating well with our members and are starting to have measurable impact on eCommerce growth,” Vachris said.

Costco is also gearing up for consumers’ adoption of AI in their shopping and believes it will benefit from this trend by offering value and quality, Vachris said.

“We are working closely with the leading AI companies to ensure our values will be visible to existing and potential future Costco members as they engage with these tools,” Vachris said.