Costco Is Finally Testing Curbside Pickup

Costco waves the white flag and is testing roadside pickups at three locations in New Mexico after long resisting the idea. But is it too little, too late at a time when consumers are demanding a range of convenient pick-up and delivery options?

The warehouse club quietly added roadside pickup as an option at three locations in Albuquerque, though the option has several caveats. For example, customers are required to order at least $ 100 worth of goods, while Costco stated on its website that there is a $ 10 fee because roadside collection “adds additional cost to our low-cost business model and limited markup structure.” .

Costco told USA Today that the roadside offering is currently “limited in one market” despite rivals Sam’s Club and BJ’s Wholesale Club making a nationwide roadside pickup last summer. And while Costco does charge a fee, BJ’s service is free for all club members, while Sam’s roadside pickup is temporarily free for all members and permanently free for Plus members.

Costco’s decision to add the service even on a trial basis marks a sharp reversal for the company, which previously announced it would not do so.

In September, Chief Financial Officer Richard Galanti said during the company’s fourth quarter earnings report, “We also believe there are some retailers out there because they feel they have to.”

“We don’t have our heads in the sand. We’ll see it, ”he said. “We have people here studying it, and maybe one day we will surprise you. But at this point we are not ready for it. “

Galanti reiterated this view during the company’s last earnings call last month, saying, “We’re not rethinking it. We keep looking and scratching our heads a little. However, we don’t currently have a current plan. “

Delivery is often not free

Costco already offers same and second day delivery via Instacart, although these also come with several reservations.

For example, same day deliveries include unspecified charges and require a minimum order amount of $ 35. Customers also pay higher prices than if they were shopping in-store.

The company’s two-day delivery option is a little more forgiving and only charges for orders under $ 75. However, Costco says on its website that customers can’t get perishable groceries through two-day delivery, can’t get weekend deliveries, have to order by noon local time, and “may” get lower prices when shopping in-store.

Dealers underestimate the value of curbside and delivery

Some retailers seem to prefer customers entering stores for pickup, either because it reduces the retailer’s labor costs by avoiding roadside pickup or free delivery, or because they hope consumers end up buying a few extra items.

However, PYMNTS ‘most recent Global Digital Shopping Index found that many retailers underestimate the importance consumers attach to roadside collection and free delivery versus online and in-store collection (BOPIS).

“Merchants do not fully appreciate consumer appetite for a robust suite of digital features and overestimate the attractiveness of more eye-catching features such as online purchase, in-store pickup (BOPIS),” PYMNTS researchers wrote. “Our research found that 38.3 percent of retailers believe that consumers use BOPIS frequently, while only 10 percent of consumers say they use BOPIS frequently or always.”

In contrast, the survey of US consumers found that interest in roadside collection “has increased significantly. 15.5 percent of those who shop digitally said it was the preferred method of shopping in July – up from 10 .8 percent in March. “

“BOPIS did not gain traction in the same way,” the researchers wrote. “The stock that preferred fell slightly to 13.8 percent over the same period. The roadside preference seems to reinforce an ongoing issue in our research: many consumers prefer to avoid going into stores. “

As Karen Webster recently stated in an analysis: “Many retailers have not mastered the logistics in order to make in-store collection anything but smooth.”

“Whether it’s parking the car and going to the store to pick something up, or being offered an in-store pickup option days after the order is placed, the problems associated with it mean that consumers increasingly opt for delivery decide – and they expect this. This delivery experience should be free, ”she wrote.

Webster said that retail survivors “will see the future for what it is – consumers who would rather shift the first and last mile of the shopping experience to the retailer who can literally deliver it for them.”

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