During Costco’s latest Q1 2014 Earnings Conference Call, Richard Galanti, executive vice president and chief financial officer, said that the company currently has no plans to deliver groceries to homes in the wake of recent fresh produce delivery trends.
When asked about Amazon’s recent decision to start grocery delivery in the Bay Area, Galanti said, “We’ll keep looking at it. We have no plans currently to do – to deliver to homes, anything other than through e-commerce which tend to be non-food items in a very limited through – certainly not fresh foods.”
Galanti went on to say that although he recognizes e-commerce as an important component of what’s out there and what’s growing, he re-affirmed that Costco is “very much a brick-and-mortar.” He noted that 97% of the company’s business is in store and not online. “We’re trying some different things now and it seems to be working. But again, e-commerce is a small percent and given a department like that is a small percent. But we are getting some traction,” he continued.
Although he believes that web-stores like Amazon are taking market share more from what are the other daily or every other day alternatives, home grocery delivery in Seattle, where Amazon is most established, has currently not affected Costco’s business. “You’re still getting a lot of key bulk items in our place on the fresh food side as well. We know our members are our most loyal members. They’re still getting some of those things at supermarkets in other forms of convenience, and Amazon will be just one of those or other forms of overnight or other delivery. It’s different value. Again, we recognize convenience as value.”
In its latest financial report, Costco’s profit rose to $425 million from $416 million a year earlier, a 2.2% increase. Net sales rose 5% to $24.47 billion from $23.20 billion last year, according to a press release.
As AmazonFresh starts to ramp up its availability, will we see Costco eventually turn to fresh produce delivery? It appears that although home produce delivery is still being tested, it will be interesting to see if Costco will start to increase its merchandise availability online.
Stay tuned to AndNowUKnow as we follow the trends in fresh produce home delivery.
