Costco Wholesale Corp. reported that its ecommerce sales dipped slightly but were essentially flat in its fiscal fourth quarter ended Sept. 3, 2023. The retailer’s total sales, however, grew 9.4% in the quarter.
Costco is No. 6 in the Top 1000, Digital Commerce 360’s ranking of the largest North American online retailers.
Costco ecommerce sales
Although Costco did not provide a dollar amount for its ecommerce sales, it said they decreased 0.8% year over year. Costco ecommerce sales for the fiscal year decreased 5.7% compared with 2022.
Food and sundries also led the retailer’s ecommerce sales, “with fresh foods right behind and some offsets on some of the non-foods categories,” said Richard Galanti, chief financial officer, in the retailer’s fourth-quarter earnings call. Sundries are small, miscellaneous items.
“Results showed good improvement this quarter versus our year-over-year results in Q2 and Q3,” he added.
Galanti also said some product category ecommerce sales decreased 15% to 20% year over year in Costco’s fiscal second and third quarters. Those included:
- Home furnishings
- Small electronics
However, compared with Costco’s fiscal fourth quarter last year, these sales decreased just 5% this year. Those big-ticket departments comprised more than half of Costco ecommerce sales in the quarter, Galanti said. Online appliance sales grew 30% in the quarter as well.
He also said he has been getting calls about Costco selling one-ounce gold bars on its website.
“Yes, but when we load them on the site, they’re typically gone within a few hours and we limit two per member,” Galanti said.
Galanti said Instacart shoppers do not count toward Costco ecommerce sales because Instacart employees enter the retail stores to shop, purchase at the register, then take the order to their customers. Instacart sales do not count toward Costco mobile ecommerce sales either, he said.
Costco operates ecommerce sites in:
- The United States
- The United Kingdom
Costco mobile ecommerce
“We’re always asked about this,” Galanti said.
Costco redesigned parts of its mobile ecommerce website, he said. It also redesigned its account page and the digital membership card, he said. And it also redesigned the header with a larger search bar and expanded selling space.
“We’ve added an app box for messages and advertisements right in the app,” Galanti said. A few months ago, Costco “opened an optical digital store where you can virtually try on glasses and then order them for pickup — prescription glasses.”
The retailer has also worked to improve its in-warehouse shopping tools on its app, Galanti said. That includes:
- Digital membership card
- Managing shopping lists
- Viewing warehouse savings
- Seeing gas prices (if the location has a gas station)
- Searching warehouse inventory
- Scanning barcodes from the app
“With the improvements made thus far over the past year, our app store rating has gone from a dismal 2.3 stars to currently 4.7 stars,” Galanti said.
Unique visitors to the Costco ecommerce site increased 40% year over year in the fiscal fourth quarter, he said. Meanwhile, Costco app installs increased 46% year over year.
Galanti said the retailer is also working on growing Costco Next.
Costco Next is the retailer’s way of connecting members with its top suppliers through an ecommerce website. The suppliers drop-ship those orders.
“When you transfer to one of our suppliers’ sites, you will be able to purchase directly from that Costco supplier,” Costco says on its website. “For any items purchased on the supplier website, the supplier will ship, provide customer service and handle returns.”
Costco Next now has 62 suppliers on its site, Galanti said. He adds that the retailer is onboarding more in categories, including:
- Electronics and accessories
- Home improvement
For the fiscal fourth quarter ended Sept. 3, 2023, Costco reported:
- Net sales increased to $77.43 billion. That’s up 9.4% from $70.76 billion in the prior fiscal year’s fourth quarter.
- Net income was $2.16 billion, up from $1.87 billion in the year-ago period.
- Costco ecommerce sales declined just 0.8% year over year.
- $1.51 billion in membership fee income, up from $1.33 billion in the year-ago period.
For the 53-week period ended Sept. 23, 2023, Costco reported:
- Net sales grew to $237.71 billion. That’s a 6.7% increase from $222.73 billion last year.
- Net income increased to $6.29 billion from $5.84 billion the previous year.
- Costco ecommerce sales decreased 5.7% compared with the previous year.
- $4.58 billion in membership fee income, up from $4.22 billion in the previous year.
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