Dive Brief:
- Dozens of products from Costco's Kirkland Signature private label brand are for sale on Amazon, according to a report from Quartz.
- Amazon shoppers can get Kirkland vitamins, candy, clothing, snacks, trash bags, olive oil, body wash and more, and Prime members can score free two-day shipping on some products.
- But according to Quartz, many products have significant mark-ups. For example, Kirkland olive oil at Costco is $16.99 but is priced at $22.99 on Amazon. Near the purchase button, Amazon then promotes its equivalent private label product at lower prices than the Kirkland items.
Dive Insight:
One of the biggest reasons behind Costco's success is its Kirkland brand, which has a loyal following and is one of the top-ranked private label brands in the industry. Costco's brand alone raked in $40 billion last year, an 11% increase from the year prior.
Within the past two years, private label sales have surpassed manufacturer brands. Mass merchants, club retailers and dollar stores topped supermarkets in private label dollar sales in 2018, according to research from the Private Label Manufacturers Association and Nielsen.
While Amazon may attract some attention in selling Costco's private label products, it should be known that Amazon sells products from other retailers like Kroger's Simple Truth and Trader Joe's. Amazon also can't offer the benefits that a complete Costco membership does. Besides its Kirkland brand, Costco provides other perks and products for customers including cheap pizza and hot dogs, free samples, electronics, bulk movie tickets and discounted trips. Amazon also doesn't sell a comprehensive assortment of Kirkland products, and considering the apparent price hikes, over time those $4 to $10 differences could add up to the equivalent of a Costco membership.
In its recent earnings report, Costco reported membership renewal rates were a steady 90.7% in the U.S. and Canada. Member households were up 400,000 since its last quarter, resulting in 53.1 million member households. Total cardholders grew to 97.2 million. Costco memberships are $60 for consumers and $120 for businesses.
Buying Costco products from Amazon might be convenient for shoppers who don’t have a Costco near them or don’t have a large vehicle to go there. On the flip side, Costco has been doubling down on e-commerce efforts by offering same-day delivery, and the club store ranked higher than Amazon in a customer satisfaction survey among online retailers (even though it's technically a wholesaler), according to the latest American Consumer Satisfaction Index report.
Other wholesale club stores including Sam's Club and BJ's Wholesale Club have both seen sales increase as well because of their efforts to improve grocery offerings and e-commerce efforts.
