Acquisition enhances Costco’s last-mile delivery capabilities

Date : 17 March 2020

Costco has acquired Innovel Solutions, a leading provider of third-party end-to-end logistics solutions, in a deal valued at $1bn.

Builds on existing partnership

Costco acquired the company from Transform Holdco, which operates the Sears and Kmart stores in the US. Innovel has provided Sears and other retailers with a last-mile delivery solution, including installation, for large, bulky items. These include major appliances, furniture, mattresses, televisions, grills, patio, fitness equipment and wine cellars. Since 2015, it has been working with Costco. Innovel will continue to work with Sears and other retailers.

Accelerates ecommerce business

Innovel operates 11 distribution and fulfillment centres and over 100 last-mile cross-dock centres. Network coverage extends to around 90% of the US and Puerto Rico. The acquisition is expected to help Costco accelerate ecommerce sales of larger items. Although this is a well-established business for the retailer, it continues to grow at a rapid pace, with sales up over 28% in the last quarter. Bringing delivery and installation in-house through this acquisition, will help Costco to grow capacity faster and enhance its customer service credentials.

Range of fulfillment options

Although the retailer has added grocery capabilities, including two-day and same-day deliveries to its ecommerce business over the last two years, its non-food business accounts for most of its sales. The retailer focuses on providing a unique range of products online, with several leading brands added over the last year. The retailer has also sought to replicate its in-club ‘treasure hunt’ approach with limited time deals, while the ecommerce platform has also enabled it to extend the selling period of seasonal items, e.g. patio furniture.

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