Costco tests (finally) the grocery bowl

Costco announced last week that it would pick up members of the warehouse club in the area on the same day on 2,000 groceries and general merchandise. There is a minimum order of $ 100 to pick up, and a fee of $ 10 for each order, because the model “adds an extra cost to our low-cost business model and limited layout structure,” the company says on its website. .

The company has previously only picked up expensive products such as jewelry and electronics, saying it is more expensive to offer wider. Some Wall Street analysts have questioned whether Costco should expand the service to other goods as the pickup of the porch explodes in popularity.

Richard Galanti, CFO of Costco, said the company wants to test it in a small market.

“We’re always trying different things. We’re still scratching a little bit about it. We thought we would try it in a discrete market where there were only a limited number of places,” he told CNN Business. “And it’s really nothing more than a test at this point.”

Costco (COST) has dedicated parking spaces for customers driving in to get their orders at all the stores in Albuquerque. Employees prepare the online orders and deliver them to customers’ cars. Customers will buy orders and pay via Costco’s website.
Costco’s test comes as competitors, such as Walmart (WMT), Kroger (KR) and Amazon (AMZN)Whole Foods, also expanded their own pickup offerings during the pandemic.

Costco’s new pickup option has a higher minimum order threshold and fee than other chains. Walmart, Kroger and Whole Foods are offering free grocery deliveries for orders over $ 35.

Over the past few years, Costco has said that grocery pickups do not make sense to offer, especially since the club does not have much space in its crowded shops and parking lots to pick up the logistics of pickups. The option requires workers to order a stage section in the store, extra cooler space to keep items fresh and dedicated parking spaces for customers driving in to pick up their groceries.

“You need to have a place to store the stuff,” Galanti said in an interview last year. “You can not store it at room temperature. You must separate it in the refrigerated, frozen and dry.”

Costco, which operates on a razor-sharp profit margin, also says it is too expensive for its business to commit employees to compiling customer orders and taking them out to their cars.

And Costco wants buyers to come into warehouses, where they often make unexpected purchases while browsing. Pickup uses this opportunity for Costco to promote sales.

“We want you to walk the warehouse and see what we have to offer,” Galanti said.

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