With low prices, low employee turnover, and steady growth, the company would seem to be an all-around success. It even boasts above-average survey scores on the quality of the shopping experience and customer service in its more than 663 stores worldwide. 

But Costco is playing catch-up online, a sector that’s growing faster than in-store retailing and where nimble competitors such as Walmart hope to gain most of their future expansion. A rarity in store retailing because it has been profitable since day one, Costco has big plans for boosting its e-commerce business, but it has also missed some opportunities.

Costco.com takes in more than $3 billion a year with a broad assortment of products that are not always found in the stores. These range from electronics and lawn furniture to caskets and pricey diamond jewelry. The convenience of free shipping and assembly are usually included. Most of Costco’s online customers are a bit more affluent than customers of other warehouse stores, and their average purchases tend to be bigger, too. 

But despite being a brick-and-mortar presence in eight countries abroad, Costco currently limits its online operations to the United States, Mexico, and Canada. Some critics have found weaknesses in the company’s online marketing efforts. Customers are not always aware of the product variety online, nor do they realize that the special offers outlined in the company’s emails, which go to more than 12 million registered customers, promote products unique to the website. Another issue is that products on the website don’t turn up in shoppers’ search engine results because of the way the website’s pages are named, a condition Costco hopes to improve via the technical process of search engine optimization. The website could also be more user-friendly, say critics, with less visual clutter and fewer poorly labeled photographs. One search engine consultant said the company’s online division is “undoubtedly leaving some sales on the table.” 

Questions

1. How can Costco.com better inform its online customers of the product variety available and the real value of its special offers? 

2. What priority do you think Costco should put on expanding its online business abroad? Is this more or less important than improving sales from the existing e-commerce operations in North America? Explain your reasoning.