Costco, With an Eye on Amazon, Expands Home Delivery Service
By Sarah Nassauer
Costco Wholesale Corp. is expanding its home delivery services as food becomes an increasingly competitive front in the e-commerce battle.
This week Costco started offering two-day delivery on shelf-stable food from its own website and expanded a fresh-food delivery partnership with Instacart, a startup that delivers groceries from retailers in one day. Both services let Costco members buy food online at lower prices than available under previous options, said Richard Galanti, the company's chief financial officer.
The moves are a departure for Costco. The company has been slow to embrace online shopping as its members tend to spend more when they visit its cavernous stores.
"At the end of the day we would love you to just come in and buy and take it home," Mr. Galanti said. But, he added, "we would rather lose it to ourselves" than have other online retailers grab the business.
Costco's share price has fallen 7.2% since Amazon.com Inc. announced it would buy Whole Foods in early June.
Investors have worried that Costco's core, high-income customers overlap with Whole Foods' shopping base and could be picked off by Amazon's efforts to lower prices.
Analyst and media reports of Whole Food's price drops are overblown, said Mr. Galanti. "We [check prices at] Whole Foods twice a week in many, many markets around the country and we're kind of scratching our head," he said. Costco has seen no sign that shoppers are defecting, he said.
In recent years, Costco's business has fared better than many retailers, some of which are reporting shrinking sales and deep losses. On Thursday, the company said sales in existing stores rose 6.1% in the latest quarter and 4.1% for the fiscal year ended Sept. 3.