Why Costco’s digital membership card is a big deal

Date : 29 July 2019

We look at Costco’s new digital membership card and what this could mean for the retailer and its members.

Ability to deliver more relevant and personalised offers

Costco has added a digital membership card to its app, enabling customers to enter its clubs and check-out without the need for a physical card. While other retailers have offered this capability for several years, and itself is not a major technological development, it fundamentally changes how the retailer can interact with its members. Costco will be able to better target them with more relevant and personalised offers and other communications. With almost 100m cardholders globally and over 53m member households, this represents a significant opportunity for the business.

Source: IGD Research

Targeting members in the club

To date, Costco has used email-based marketing to target its members, a tool that has proven to be highly effective. However, this has relied on having access to members’ emails. Through integrating the membership card into the app, it is likely to drive downloads and increase usage frequency. This makes it a much more valuable tool for Costco to communicate with its members, particularly if it can target its members while they are in its clubs.

Improving the member experience

This development could help to improve the overall member experience at Costco. Although the functionality of the digital membership card is limited initially, it could be further developed through integrating payment and offering scan and shop functionality. With its clubs generating significant volumes, Costco has launched several related initiatives recently including self-checkouts and pickup lockers for online orders.

Closing the gap on Sam’s Club?

In the club channel, Walmart’s Sam’s Club business has been at the forefront of digital innovation. It remains the one-to-watch, with its programmes several years ahead of its competitors. Many of its initiatives came to life with the launch of its Sam’s Club Now retail lab in Dallas earlier this year. One of the unique aspects of this club is that all members must use the retailer’s Scan & Go app. This has been a major success for the business overall, with more than 90% of members who try the app, using it again on their next trip. The club also features smart shopping lists, with machine learning and purchase data auto populating a member’s shopping list, along with virtual reality-based wayfinding and navigation.

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