Retailers vs. Amazon: e-Commerce Is Not the Only Option

Posted by Hai Nguyen

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Online shopping is moving onwards and upwards. Consumers now can buy basically everything without ever setting foot inside a physical store. And when it comes to e-commerce, no one can escape the shadow that Amazon casts. But that does not mean all brick-and-mortar retailers are getting crushed.  

The shift in the consumer’s buying habit forces retailers to think outside the box. Is e-commerce the only way to go? Is brick-and-mortar coming to an end? 

Read more: 4 Digital Retail Trends to Look Out for in 2018 and Beyond

Costco Facing Modern Retail Problem: E-Commerce or Brick-and-Mortar


How Costco deals with getting Amazon-ed

Costco is just one among many wholesale retailers that got “Amazon-ed”. And their journey to achieving a seamless customer experience via the omnichannel method is both urgent and extremely complicated 

Even though e-commerce is believed to be the way to go to remain competitive in midst of the price war in the retail sector, Costco’s goal is not to completely transform their business model to e-commerce. 

According to Galanti, Chief Financial Officer of Costco, e-commerce certainly plays a critical part but they do not want to lose the loyal customers who usually visit their stores. Additionally, combining both offline and online channels probably helps attract and retain new clients, especially Generation X and Z buyers.  

Galanti highlights that while the revenue of online channels is growing at 32.3% annually, it accounts for only 5% of total sales 

Read more: How customers embrace omnichannel

Download whitepaper "Embracing omnichannel - How brick & mortar  retailers stay relevant in the digital age" here

The Costco way to e-commerce 

Instead of deploying e-commerce on a wide scale, Costco chose to approach it on a limited basis with a strong focus on nurturing the customer’s loyalty and maintain the in-store visits with targeted promotions and Buy Online, Pick-up in Store programs. The positive results they have achieved so far are: 

  • Online grocery delivery has gained traction by utilising service from a third party, such as Instacart or Shipt, to fulfil the promise of “same-day” delivery for fresh produce  
  • Diversify the “limited and luxury” categories currently available online, such as jewellery, electronics, and handbags 
  • Push sales for seasonal products which used to have a short life cycle if sold only in-store  

By enhancing its presence both online and offline, Costco has seen some positive changes in both profit and warehouse traffic. The BOPIS method has also brought in various perks, particularly when the customers are in the warehouse to pick up their online orders, they tend to spend even more than what they originally planned for.     

Read more: Retail Pro 9 - Serious software for serious retailers

There is no definite answer on whether e-commerce is the only way to go. In the customers’ point of view, they feel better when they walk through the shelves. This means the business should incorporate online method with the shop floor process to achieve higher revenue and a more sustainable future. 

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 Rick Yvanovich
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