Costco’s recent entry into online grocery is being put to the test ahead of the holidays with email marketing efforts geared toward generating awareness and trial usage.
Costco launched its two variations of online grocery roughly a month ago and has been engaging members with email marketing touting the launch of the service. One version offers free two day nationwide delivery on orders of more than $75, but only includes about 500 dry grocery items. Costco fulfills the orders from its network of high volume business centers. Costco’s second grocery offering includes same day delivery on orders of more than $35 and is powered by Instacart, the crowdsourced delivery company that has emerged as the dominant service provider to food retailers. Costco’s same day delivery option is available at nearly 400 of its U.S. locations with about 1,700 products available.
Costco is transparent with members that same day delivery prices will cost more compared to shopping in one of the company’s physical warehouses.
“Selection and delivery are the most expensive part of the online shopping process, as compared to buying in the warehouse,” the company notes on its Web site. “At Costco, we do our best to keep costs to a minimum, but added delivery and other fulfillment costs included in the purchase price and in separate service fees on orders means that items purchased from Costco Same-day will be more expensive than if the same products are purchased at a warehouse.”