Costco’s early success in China

Date : 02 January 2015

Following the launch of its store on Alibaba’s Tmall online marketplace in China, Costco has seen a strong initial response from shoppers.

$6.4m sales in first month

Costco opened its store on Alibaba's Tmall online marketplace last October, offering a range of imported food and healthcare goods, including its Kirkland Signature private brand ranges. In an update on the performance of Tmall Global, which enables companies based outside China to sell products directly to Chinese customers, Alibaba revealed that Costco achieved sales of more than $6.4m in the first month. During China’s Singles Day shopping event in November, it achieved sales of around $3.5m.

Low-risk opportunity to test demand

Costco’s success in China is unsurprising given its strong track record in international markets. Asia has been the focus of its more recent overseas expansion. Although Costco does not have any physical stores in China, it is currently using its operations in Taiwan to support its online presence in China, its partnership with Tmall provides with a relatively low-risk opportunity to test the demand for its products in the country.

Testing various ecommerce models

Entrance to China's ecommerce market is part of Costco's push to grow its online business. With online operations in the US, UK, Canada and Mexico, it has been testing new models in the US. This has included partnering with Google Express to offer same-day delivery. The partnership has also enabled Costco to make its in-store ranges available online; it typically offers a different range of products online, focused on non-food. This could pave the way for an enhanced online presence going forward, particularly as its main domestic competitor, Sam’s Club, accelerates its digital transformation.

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