Costco has approximately 67.4 million members with 637 warehouses , 454 locations in the United States & Puerto Rico, 85 in nine (9) Canadian provinces with the difference distributed in Mexico, United Kingdom, Japan, Taiwan, Korea and Australia. Costco is the operator of the largest wholesale club and the 6th largest retailer globally with approximate sales of US$100 billion (Costco, 2014).
Due to the growing Ecommerce and online local and foreign market, mainly attributed to the increase in mobile and tablet device users; Costco wanted to take advantage of this developing market. It was discovered however that they had certain challenges which had to be addressed before proceeding with their expansion plan.
Challenges
Costco’s international warehouse business is very successful and still in high-growth mode. Although local country managers recognized the importance of adding online channels, senior leadership was not convinced that the size of the international e-commerce opportu??nity was large enough to justify a major investment, which might come at the expense of warehouse expansion, with its predictable returns. Furthermore, senior management was concerned that creating an online operation in each country would either distract local managers from growing their warehouse business or add significant headcount and training costs.
The idea of rolling out e-commerce to foreign countries also raised many operational unknowns: What kind of online presence should Costco have globally? What are members’ online shopping expectations in each country? Where should the website’s management be located? How should operational issues be handled, such as number of sites, product assortment, marketing, payments, fulfillment and delivery, cross-border trade, and technology platforms?
It was important for the challenges to be assessed and the right decision to be taken due to the growth path of the company and the trending increase in the Ecommerce industry transactions.
Bibliography
Costco. (2014). Retrieved from http://www.costco.com/about.html
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