Since then, members of the chain’s warehouse club have benefited from its comparatively low prices because of its uncomplicated business model.
Customers pay a fee for membership that entitles them to purchase goods from Costco’s warehouses that are intentionally designed to keep costs low.
The warehouses are lightly staffed and customers simply walk through the stores and serve themselves.
Costco also provides customers little brand choice for its products. It buys its products in bulk. These practices reduce inventory and operational costs.
Costco also saves money by not advertising in the traditional sense. It relies primarily on word-of-mouth from customers who have good experiences with the company’s discounted prices.
Costco’s Approach to Use of Technology
The retailer keeps itself a bit behind the curve on technology. It chooses to allow others to innovate and then takes advantage of technology where it believes it will fit with the company’s business goals.
Costco only began curbside pickup at some stores in 2021, according to RetailWire. It has relied heavily on Instacart.
Now, some new developments around its business practices with Instacart shoppers appear to be in the works.
A Reddit post pictures a screenshot of a Costco outlet posting a notice for Instacart workers that, “Store policy requires waiting at offsite parking.”
Many commenters on Reddit appear to be Instacart shoppers that wish they didn’t have to be near the warehouses to pick up jobs.
“Many Instacart shoppers used to be able to claim orders even when they were at home or miles away from the store,” wrote RetailWire. “But competition for orders has increased, and as a result, many drivers pull into store parking lots and watch the app in hopes of scoring better orders.”
Costco did not comment on the development, according to to RetailWire.
“Instacart does not require shoppers to wait in a store’s parking lot to be eligible for an order, but it does tell its contractors that they have better odds of scoring an order or a batch of orders if they are close to a store,” RetailWire wrote.
Costco CEO Richard Galanti had discussed the company’s use of technology during its fiscal third-quarter 2023 earnings call.
We think we can do more. We can certainly do more online. We don’t have some strategic goal to go from 8%, which is still a $20 billion business. But to go from 8% of sales to 16%, but let’s go from 8% to 9%, 9% to 10%, 10% to 11% over a certain period of time. And we think that with some of the things we’re doing on that side, we can.
I think we are getting better on the technology side, playing from behind a little bit on that, but I think we’ve finally got a game plan and some people that are helping build those areas up both from a marketing and advertising standpoint, taking advantage of the advertising dollars that are out there that we’ve done pretty well despite ourselves, but we know we can do a lot better in grabbing some of those dollars. So — and what we will use it for is to drive sales.
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