Costco is continuing to push against the near duopoly in the retail supermarket business by launching their online shopping service. The kickoff will be early next year, when their new $78m warehouse at Kemps Creek in western Sydney is complete. It will be used as a base for distribution of massive packs of toilet paper, huge barrels of pretzels and other bulk-sized items.
Costco is expanding their local operations. A new store opened at Epping, in Melbourne’s northern suburbs, last week giving them ten stores in Australia. But the move to online will be a welcome move as ten locations, with just a single store in the ACT, South Australia and Queensland, doesn’t make it easy for shoppers to get their hands on oversized boxes of laundry powder.
Online shopping will require the payment of the annual membership fee which is currently $55 for businesses (who get a home membership for someone living at the same address) or $60 for individuals. And while some people don’t like the idea of the fee, if you’re buying an expensive item like a TV or computer, you’ll get that back on your first purchase given some of the discounts they offer.
The US store charges a little more for online purchases. However, that means the delivery fee is covered if you want items shipped the same day. You get the lower price, in the US, if you spend $75 on the order and opt for two-day delivery. The longer delivery window is not available for perishable goods.
Whether they adopt a similar model here remains to be seen. Our geographic dispersion and the smaller number of stores and distribution centres, at the moment, make the establishment of a large online distribution network. But Costco has taken a fairly slow path into Australia and seems to only expand cautiously. So, I expect their online service to only launch when they feel it will be ready. And, even then, I wouldn’t be surprised to only see it initially launched in Victoria and New Soth Wales as that’s where they have most stores and, therefore, a stronger distribution network.