🛒 What e-commerce?

Costco will continue focusing on brick-and-mortar business even after e-commerce sales growth

Hey Global Investor, here’s what you need to know before the US markets open.

Market Snapshot 📈

S&P 500 (Thursday Close) 3,722.48 +21.31 (0.58%)

NASDAQ (Thursday Close) 12,764.74 +106.56 (0.84%)

FTSE 100 (5 PM IST) 6566.42 +15.06 (0.23%)

NIFTY 50 (Today’s Close) 13,760.55 +19.85 (0.14%)

USDINR (5 PM IST) 73.52 (1 Year +3.56%)

What e-commerce? 🛒

Costco will continue focusing on brick-and-mortar business even after e-commerce sales growth

Background: Costco is the second-largest retailer in the world. Its membership-only warehouse clubs are known for the super cheap food combos, which customers swear by. For instance, its hotdog and drink combo cost $1.50 and the price hasn’t changed since 1985! The company takes pride of places when measuring customer loyalty. Membership renewal rate routinely exceeds 90% in the US and Canada.

With the pandemic raging, Costco’s members turned to its website for shopping. Case in point, the company reported a 91% Y-o-Y growth in online sales during its fiscal Q4.

What Happened? E-commerce growth notwithstanding, Costco will continue focusing on physical stores. That’s quite a contrast compared to retailers across the country who are pulling all stops to cater to the ubiquitous online shopper.

The company, cognizant of the fact that its members are among the most loyal clientele anywhere in the world, isn’t planning to abandon its long-run traditions. Free food samples are a sacrosanct part of the in-store experience and a customer favorite. Along with the $1.50 hotdog + drink, the $4.99 rotisserie chicken isn’t going away anytime soon either.

Add to it, the wholesaler’s status as a one-stop-shop where people can buy a wide variety of essential and discretionary items in a single trip, and the rationale for emphasizing in-store shopping starts making sense. During the pandemic, customers also upgraded to Costco’s executive membership, which costs twice as much but offers 2% cashback on most purchases.

Now, that’s a loyal customer base one wouldn’t want to alienate by shifting business online in a hurry, even if it’s a niche that’s growing.

Market Reaction: On Thursday, Costco closed at $370.29, up 0.23%

Company Snapshot 📈

COST $370.29 +0.85 (+0.23%)

Analyst Rating (34 Analysts) BUY 62%, HOLD 32%, SELL 6%

Newsworthy 📰

  • Thou Shall Not Buy: Sony pulls Cyberpunk 2077 from PlayStation store after backlash (SNE +2.01%)
  • Now There are Two: FDA panel endorses second Covid vaccine in U.S. as Moderna wins key vote in path to emergency use (MRNA +5.09%)
  • A Cold Decision: Coca-Cola will cut 2,200 jobs worldwide as part of restructuring plan (KO +0.40%)

Later Today 🕒

  • 7.00 PM IST: Current account deficit
  • 8.30 PM IST: Leading economic indicators
  • After Market Close: Nike Inc Earnings (NKE)

Fun Fact of The Day 🌞

The Sun accounts for 99.8% of the total mass in our Solar System.

Disclaimer: The content of this article has been created and published by Winvesta India Technologies Pvt. Ltd., in order to ease the reader’s understanding of the subject matter. The information and/or content (collectively “Information”) provided herein is general information sourced through various news reports and does not constitute a research report or a research analysis. The Information is not intended to offer advice, target or solicit any particular customer or group of customers to buy or sell securities. 

Winvesta does not render any research or advisory services and provides a more detailed description of its services on its website and mobile application along with the terms and conditions published therein from time to time. While reasonable care has been exercised to ensure that the Information is adequate and reliable, no representation is made by Winvesta as to its accuracy or completeness and Winvesta, its affiliates, subsidiaries and employees accept no liability of whatsoever nature for any direct or consequential loss, including without limitation any loss of profits, arising from reliance on this Information. Neither Winvesta nor any of its affiliates are acting as an investment adviser, research analyst or in any other fiduciary capacity. Accordingly, reader’s are expected to undertake their own due diligence in consultation with their own advisors and are advised not to solely rely on the Information. Any such reliance shall be at the reader’s own risk. 

All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. There is always the potential of losing money when you invest in securities, or other financial products. Investors should consider their investment objectives and risks carefully before investing.

Start Building Your Global Portfolio Today

Download Winvesta App now to Get Started