Costco Unveils 2 New Grocery Delivery Options

Costco Wholesale Corp. has introduced two- and same-day grocery delivery for its members.

Costco Grocery offers two-day delivery for nonperishable foods and sundries, free for orders of more than $75. Shoppers may choose from 500 shelf-stable grocery SKUs, to be delivered in boxes weighing up to 40 pounds through UPS.

The orders, fulfilled at several of Costco’s business-delivery centers, provide “very competitive pricing and value proposition,” priced “significantly better” than the original prices of many of the items on Costco.com, Costco CFO Richard Galanti told attendees on its quarter-four 2017 earnings call Oct. 5. The assortment will expand over time.

Meanwhile, Instacart White Label, created in partnership with third-party delivery provider Instacart, is currently live at 376 locations in the United States, with more stores planning to add it by the end of fiscal 2018, Galanti said. It offers approximately 1,700 SKUs of shelf-stable and fresh groceries for delivery the same day, and is said to be “a very competitive pricing value proposition, better than before.” Costco members will now have access to promotional pricing similar to that in its multi-vendor mailers, and also receive the 2 percent reward on purchases similar to in-store purchases made with the Costco Visa card.

Shoppers can find each service’s site by going to Costco.com and clicking the “Grocery” tab. Doing so will take them to a page offering and explaining both delivery options.

Costco’s move is aimed to capture the rapidly increasing opportunity the Issaquah, Wash.-based retailer is seeing in the digital grocery space and defend against the Amazon.com threat, said Matt Sargent, SVP of retail at Minneapolis-based research consultancy Magid.

Data from Magid Retail Pulse shows that Costco members are more “digitally” focused than customers at Walmart and Kroger: 41 percent of them have purchased groceries online, while only 30 percent of Walmart’s customers and 28 percent of Kroger’s customers have done the same. This is particularly evident within 27- to 37-year olds with families, of which 43 percent have purchased groceries online, making them central to Costco’s long-term growth.