Contemporary Marketing 16th Edition by Louis Boone,David Kurtz

Exercise 19

Costco, the $89 billion warehouse-style chain, is the third-largest retailer in the United States. With low prices, low employee turnover, and steady growth, the company would seem to be an all-around success. It even boasts above-average survey scores on the quality of the shopping experience and customer service in its 600 stores worldwide.
But Costco is playing catch-up online, a sector that's growing faster than in-store retailing and where nimble competitors like Walmart hope to gain most of their future expansion. A rarity in store retailing because it has been profitable since day one, Costco has big plans for boosting its e-commerce business, but it has also missed some opportunities.
Costco.com takes in about $2 billion a year with a broad assortment of products that are not always found in the stores. These range from electronics and lawn furniture to caskets and pricey diamond jewelry (delivered by Brink's). The convenience of free shipping and assembly are usually included. Most of Costco's online customers are a bit more affluent than customers of the warehouse stores, and their average purchases tend to be bigger too
But despite being a brick-and-mortar presence in eight countries abroad, Costco currently limits its online operations to the United States and Canada. Critics have also found flaws in the company's online marketing efforts. Customers are not always aware of the product variety online, nor do they realize that the special offers outlined in the company's emails, which go to about 12 million registered customers, promote products unique to the website. Another problem is that products on the website don't readily turn up in shoppers' search engine results because of the way the website's pages are named, a condition Costco hopes to improve via the technical process of search engine optimization. The website also isn't as user-friendly as it could be, say critics, with "rookie mistakes" like visual clutter and poorly labeled photographs. One search engine consultant said the company's online division is "undoubtedly leaving some sales on the table."
QUESTIONS FOR CRITICAL THINKING
1. How can Costco.com better inform its online customers of the product variety available and the real value of its special offers?
2. What priority do you think Costco should put on expanding its online business abroad? Is this more or less important than improving sales from the existing e-commerce operations in the United States and Canada? Explain your reasoning.