The 2024 Costco
eCommerce Playbook
Best Practices and Insights for Omnichannel Success
Now is primetime for brands to cash in on Costco’s eCommerce growth
As one of the world’s largest wholesale distributors, Costco is seeing consistent growth. In July of this year, despite economic uncertainties, the company reported a 7.1 percent increase YoY. The secret to the retailer’s success? Online sales.
Costco has recently strengthened and expanded its eCommerce presence, investing in its digital infrastructure and marketing, improving delivery times, and adding in-store pickup items. These robust changes have been well received by consumers, resulting in a 20.7 percent increase of eCommerce sales in Q3 of 2024 for Costco. It has also positioned itself as the world’s third-largest retailer, according to the NRF.
So how can your brand leverage Costco’s online success to generate sales for your omnichannel eCommerce-enabled brand? In this guide, learn the latest benchmarks, insights, and best practices for leveraging Costco as a key online retailer.
What does the Costco Membership mean for online shoppers?
A major difference between Costco and other retailers is their membership model. By generating revenue and loyalty with memberships, Costco can sell products at deeper discounts than traditional retailers. Additionally, with Costco’s membership model, they can see further insight into shopping habits and past purchases. According to DesignRush, they are further utilizing this model by utilizing this data to venture into the ad network market.
While the membership model has been a cornerstone of Costco’s business since its inception, the retailer recently started offering new membership incentives. Their partnership with Uber has allowed them to offer discounts on Uber One memberships and offer Uber gift cards. They also incentivize online shopping with other benefits, strengthening member loyalty and eCommerce engagement.
Brands are investing in social commerce to send shoppers to Costco.com
Regarding ad spend, brands sending traffic to Costco spend most of their dollars on social, which drives a substantial 96.4 percent of Purchase Intent Clicks*.
Meta drives the most traffic to Costco, compared to other social platforms
With so much traffic coming from social, what channels are driving the most traffic to Costco? The MikMak Shopping Index revealed that three social channels specifically lead shoppers to checkout.
Meta is leading the way significantly, with 93.4 percent of traffic. However, TikTok and YouTube are also sending some consumers to Costco.
California is seeing the most in-market Costco traffic
Costco sees the highest volume of eCommerce traffic on Thursdays, 7 - 11 PM ET
Costco eCommerce traffic spikes in the evenings
Costco has a strong partnership with Instacart
In addition to its own app and online marketplace, Costco has strengthened its eCommerce offerings through its partnership with Instacart, providing members with convenient same-day delivery options. This integration complements Costco’s existing logistics capabilities, helping the retailer meet the growing demand for online grocery shopping.
Additionally, Costco members can benefit from discounted Instacart+ memberships, that include reduced rates and trial periods for new users. By linking their Costco membership to Instacart, members can save on delivery fees and enjoy seamless online shopping experiences. This collaboration highlights Costco’s commitment to enhancing the convenience of online shopping for its customers while expanding its digital reach.
Read our Instacart guide to learn more →
Best Practices
Consider Costco’s popular private label, Kirkland Signature
Kirkland Signature, Costco’s private label brand, generates as much, if not more, revenue than some of the world’s largest brands. This popular brand designs products to be of equal or better quality than national brands, and consumers see that. The brand’s sale penetration garners more than a quarter of the retailer’s total merchandise sales. As a rule, Costco mandates that private label products comprise 25-30 percent of their category merchandising, and has built up brand equity with the Kirkland brand for years.
However, with a robust marketing plan and understanding of private labels in your competitive landscape, your brand can adequately compete with Kirkland Signature, or any other products in your aisle. Stay close to first-party data to ensure your products are positioned to consumers who are most likely to buy, protecting your market share. Additionally, offer Costco as a checkout option directly from your brand’s shopping experiences, whether it be on your media or your brand website, to seamlessly add your products shopper’s Costco carts, and shorten the overall path to purchase.
Here are some best practices when it comes to competing with private label from our partners at Profitero:
- Brands must embrace their role as category advisors and help retail partners develop a private label strategy that balances profit, growth, and consumer choice. Sales leaders shouldn’t shy away from discussing private label search in JBPs and retail media negotiations, ensuring their brands get a ‘fair share’ of organic placement as a reasonable ask in return for media and trade commitments.
- Private label may win on price, but national brands have the advantage when it comes to developing differentiated content and innovations because they deeply understand the consumer.
- Competing with private labels on price rarely leads to sustainable growth, as dynamic pricing algorithms track every price change, driving a race to the bottom and lowering average selling price (ASP). However, monitoring pricing and promotion dynamics helps brands benchmark against competitors, including private labels, and better understand shopper decisions from a full category perspective.
Read more from our partners at Profitero in their report, Fighting Back Against Private Label Online
Leverage eCommerce enablement and analytics
Enable shoppable media with a partner like MikMak. Make the path to purchase for Costco short and seamless for your consumers. Remember, every step outside of the intended path to purchase opens up opportunities for your competitors to intervene. Using MikMak Insights helps you manage multichannel marketing strategies and gain actionable data.
Utilize a marketing software and tools, including MikMak’s Custom Report Builder. By doing this, brands can ensure a consistent presence across channel, access real-time marketing data, and use data analytics marketing to improve omnichannel strategy and sales performance.
Get close to the data by utilizing platforms like MikMak for comprehensive eCommerce enablement and analytics to seamlessly manage multichannel retail strategies and gain actionable insights. By gathering and leveraging first-party data, brands can enhance marketing effectiveness, personalize the shopping experience, and ultimately drive profitability.
Product Feature
MikMak Insights Custom Report Builder
Improve marketing effectiveness by building custom reports with all of the desired metrics, dimensions, and filters you want, directly in the MikMak Insights platform.
Strengthen your relationship with Costco
Keep a close eye on which products perform best at Costco, and direct traffic accordingly to encourage higher conversion rates. Consider using tools like MikMak Custom Retailer Allocation to achieve this. Additionally, you can enable MikMak’s where to buy product locator feature, MikMak Store Locator, so shoppers can see when your products are in-stock at their local Costco. You can also use proprietary, retailer-specific consumer insights from MikMak in joint planning discussions with Costco to unlock shelf space and media value.
Product Feature
MikMak Custom Retailer Allocation
Apply percent allocations for how frequently retailers will appear in Retail Media experiences to drive higher conversion with intelligent, performance-based retailer redirection capabilities
MikMak Store Locator
Global store locator that helps shoppers find local retail options where your products are available, directly from your website or media.
Costco has a new, data-robust retail media network
Costco’s new retail media platform offers eCommerce brands access to first-party data, allowing for personalized ads targeting its 74.5 million household members based on shopping behavior. While still in development, Costco's ad network has the potential to rival major players like Walmart and Target. By integrating MikMak’s retail media solutions, data, and insights alongside Costco’s robust membership data, brands can enhance their strategies to drive both eCommerce and in-store sales.
Product Feature
MikMak for Retail Media
Optimize for retail media. Bypass the landing page and lead shoppers straight from your ad to the retailer PDP of your choosing, reducing the number of clicks a shopper makes, while still collecting all the same data and insights expected from MikMak.
MikMak Commerce for Retail Media provides consistent and real-time reporting of retailer-specific performance data alongside national media investments including paid search, influencer media, display, video and more; empowering brands with the information needed to properly adjust and scale their retail media strategy.
Implement scalable tools and platforms for global efficiency
Save time and money companywide. One easy-to-use global platform like MikMak, complete with full-service and self-service tools, automatically enables consistent reporting and fast decision-making across the entire organization. Our platform empowers you to build, design, and customize eCommerce websites and media experiences, all backed by our best-in-class global retail network, inventory data, and sales attribution.
