Costco Canada pilots grocery delivery service

Stewart Samuel
Program Director - Canada
@RetailAnalysis

Date : 19 July 2018

Costco Canada is testing a new two-day grocery delivery service in southern Ontario.

Orders fulfilled at Business Center

The new service enables members to qualify for free two-day delivery for orders over $75. They will be able to shop a broad range of grocery, consumable and health and beauty categories, although perishable categories will not be included as part of the initial pilot. The orders will be fulfilled by the retailer’s first Canadian Business Centre which opened last year. Deliveries will initially be available Monday through Friday and the pilot is expected to be extended to additional areas over the next year.

Source: IGD Research

Looking to replicate success of US ecommerce operation

The retailer will be hoping to replicate the success that Costco has achieved with online grocery delivery in the US. Last year it launched two new services, including same-day delivery in partnership with Instacart and a nationwide, two-day delivery service for non-perishable and sundry items, encompassing around 500 products in total. Like the model in Canada, this service also offers free delivery for orders over $75, with orders fulfilled at its Business Centres. Last quarter, US ecommerce sales were up 36.8%, accelerating from an increase of 27.3% in the previous quarter.

Potential to work with Instacart for same-day delivery

This service is likely to be popular with its members in Canada. Costco’s clubs are particularly busy in the country and traffic congestion in Toronto can be a major challenge. However, the lack of perishable products, no store pickup option and a two-day delivery window make it more likely that it will mainly be focusing on fulfilling planned shopping trips. Potentially, it could also partner with Instacart in Canada to offer same-day delivery given that it entered the market in partnership with Loblaw last year. This would broaden the appeal of the proposition and make it more comparable to the services being offered by competitors including Loblaw, Walmart and Amazon.

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