Costco has two new weapons in its battle against Amazon
Costco is rolling out new delivery options in an effort to take on Amazon.
On Thursday, the retailer announced that Costco Grocery will offer two-day delivery on nonperishable items, like cookies, cereal, and canned foods, starting this week. Delivery will be free on orders more than $75.
Additionally, the retailer partnered with Instacart for same-day delivery of all online grocery items. The option to have online groceries delivered from Costco in as little as an hour is available at 376 of its 514 US locations, with plans to expand to more stores in the coming months.
The new delivery options come at a time when e-commerce is exploding in the grocery industry, with retailers like Walmart and Kroger making major investments in their online businesses. Amazon is seen as a growing threat, especially with the e-commerce giant's acquisition of Whole Foods in August.
"We feel good that we've got a few delivery options for our members that frankly are better than the ones they were doing the day before with us, or with Instacart, or with anybody else," Costco CFO Richard Galanti said in response to a question about the Whole Foods acquisition's impact on sales.
Costco reported Thursday that its comparable e-commerce sales grew 21% in the fourth quarter, rising 13% overall in fiscal 2017.
Historically, Costco has lagged behind the competition when it comes to e-commerce. It's important that customers still visit Costco warehouses, where they tend to spend more money, Galanti said. But, with the new delivery options, executives say it's time for Costco to build up its online business.
"There are people that actually want to go touch their fresh foods and decide, pick it themselves," Galanti said Thursday. "There's going to be an increasing percentage of online and online delivery and the question is, in brick and mortar ... 'How can you drive sales if you're not offering as many alternatives?'"
Costco's comparable sales in the US rose 5.8% in the most recent quarter. Total revenue reached $42.3 billion, beating analysts' predictions of $41.6 billion, according to Reuters.
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