The Street reports on a new pricing strategy at Costco:
When customers buy bigger-ticket items, like appliances or larger televisions, from chains such as Target, Walmart and Best Buy, they “don’t see the full prices when they look at those items — specifically appliances — on the floor.” In fact, the story says, “you face a variety of fees on top of the advertised price. Those can include charges for delivery, setup, and removal of old appliances.”
But Costco now “has decided to be more up front with its pricing, making a direct effort to show its value proposition versus its rivals.”
Some context:
“Costco began handling the delivery of big and bulky items in-house in 2020, after its $1 billion purchase of Innovel Solutions, a last-mile-shipping service. The retailer made that move to better control its pricing and ability to deliver to customers during the covid pandemic, when demand for appliances and other larger items spiked.
“Previously, the warehouse club had been using third-party services, including Innovel, to handle its deliveries for these items. Walmart, Best Buy, and Target generally use third-party-delivery companies for larger items.
“Costco’s definition of big and bulky items includes furniture, mattresses, televisions, major appliances, grills, patio furniture, and fitness equipment. That’s not a complete list, but it’s representative of the items for which the retailer uses its in-house delivery service.”
KC’s View:
Of course, Costco can be more transparent because its in-house services give it a better handle on costs. But I do think this allows Costco to be more than a source of a product, but also a resource for the shopper. That’s valuable real estate to occupy.
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