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An analog store in a digital world.
Image source: Getty Images
When we say something has a “cult following,” we usually mean its fans are a bit more dedicated than makes sense to outsiders.
Take Costco, for instance. Folks who love Costco seem to really love Costco. Seriously, start a conversation with a Costco regular. You’ll get a very detailed list of everything they love — and why you’d love it, too.
I get it. Costco can be pretty great, especially from a personal finance angle. Who doesn’t love to save money? And Kirkland products are often pretty great, especially compared to other store brands.
But — even Costco isn’t perfect. In fact, Costco has a major flaw, and it’s the reason I’m more of a Sam’s Club shopper than a Costco-ite (Costco-er? Costco-ian?).
Costco’s fatal flaw: online shopping
In today’s world, many of us spend more time shopping online than we do in stores. (I only had to go into one store during the entire holiday shopping season!) So a good online shopping experience is absolutely critical for a store to survive.
Or, it would be — for anyone but Costco apparently.
Costco’s online experience is…lackluster, to put it nicely. There are so many things it just doesn’t do.
Want to see what’s in stock at your local store? Sorry. Want to place an online order to pick up at the store after work? Bummer. Want to order your regular Costco dry goods and get them shipped to your door? You might be able to find them online — but be prepared to pay significantly more than you would in a warehouse.
Oh, and to kick us while we’re down, you don’t get free shipping until you spend at least $75.
In contrast, Sam’s Club seems to actively encourage online shopping. You get many of the same deals online that you would in store (plus a good number of online-only items you can’t even find in the warehouse). Pretty much anything not frozen can be shipped to your door, and you even get free shipping if you’re a Sam’s Plus member.
The analog/digital divide
When you think about it, Costco’s focus on in-person shopping makes perfect sense, at least from a retailer’s perspective. After all, statistics say we spend more money when we shop in the store than when we shop online.
But there are other reasons Costco may want to keep their online presence minimal, as well. For example, not posting in-warehouse prices online allows Costco more freedom to tailor those prices at the store level. It can also run flash sales and other timed events without needing potentially complicated online updates.
Then there’s the brand issues. Have you ever seen an online item that won’t show its price until you add it to your cart? This is due to manufacturers who have a “minimum advertised price.” Essentially, this means the store can’t advertise the item for below a price set by the manufacturer. Costco stores can sell it for less, depending on the contract — it just can’t advertise it publicly. (Fun fact: This is considered price fixing in the European Union and is thus illegal.)
By keeping its warehouse prices hidden online, Costco avoids any potential manufacturer issues with pricing. But from a shopper’s perspective, it’s super annoying, especially when I want to compare prices between Costco and, say, Sam’s Club.
The real cost of savings
If you love strolling the aisles at Costco, grazing on samples and looking for deals, then you probably don’t mind its substandard online functionality. And more power to you.
But if you’re anything like me, then Costco’s poor online experience is a major gripe. When I need a pantry staple or even a popular electronic device, I don’t trudge out to Costco. No, I head online — to the Sam’s Club website.
Could I save more money if I shopped in person at Costco instead of online at Sam’s Club? Maybe. But I’d have to go through Costco aisle by aisle to actually compare the real savings potential. Who has time for that?
What I can do in minutes online with Sam’s Club would take an hour-long shopping trip with Costco (and traffic, let’s not forget the traffic; when did everyone forget how to drive?). In the end, the $1 here or $0.50 there that I could save at Costco takes a time investment I simply don’t want to make.
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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Brittney Myers has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.
