Wednesday, October 15, 2008

Costco E-Commerce Sales Increase 41.7%

Despite a weak economy, has wrapped up another year of strong web sales.

For the 2008 fiscal year, Costco Wholesale Corp. generated web sales of $1.7 billion, an increase of 41.7% from web sales of $1.2 billion in fiscal 2007.

Good News/Bad News Editors Note:

Had Costco  offered HomeATM's PIN Debit solution during this past fiscal year...and converted only 35% of their $1.7 Billion in sales to PIN Debit, they would have an extra few million dollars in their coffers right now.  PIN Debit is  significantly more it has a significantly lower interchange rate.

How significant?  Costco would have saved close to $6,000,000 on Processing Fees!
  The Bad News is that Visa and MasterCard have their $6 million instead. Now for the Good news...there's always next year!   (spoken like the true Cub Fan that I am...)

In comparison, Costco, No. 18 in the Internet Retailer Top 500 Guide , grew total revenue by 12.6% while comparable warehouse sales rose year-over-year by 8%.

For fiscal 2008, Costco posted net income of $1.28 billion on revenue of $72.5 billion vs. net income of $1.08 billion on revenue of $64.4 billion in the prior year. Overall accounted for 2% of total sales and drove 6% of the growth in revenue across all channels. “Internet sales for the whole year came in just shy of $1.7 billion, certainly beating our own budget,” Costco chief financial officer Richard Galanti told stock analysts on Costco’s recent year-end earnings call.

Though Costco didn’t break out specific numbers, Internet sales were softer in the fourth quarter, growing year-over-year by 26% compared with 34% in Q4 of fiscal 2007. “In recent weeks we have seen a slight reduction in the average ticket, but not in frequency of transactions,” Galanti told stock analysts. “Our average ticket is over $400 and big-ticket items have certainly slowed.”

Overall In the fourth quarter ended Aug. 31 Costco posted net income of $397.8 million on revenue of $23 billion, compared with net income of $372.4 million on revenue of $20.5 billion in Q4 of 2007.

Costco members are upscale shoppers.

See: Surprise!  Affluent "Spend Most"...Time Online

About 74% of’s customers are college graduates with annual household income of more than $78,000 and 90% are homeowners. 50% of customers who shop online also are executive members who pay a higher annual fee for perks such as annual rewards and lower prices on services such as check printing, auto financing and long-distance phone service.

Costco ended fiscal 2008 with 7.6 million members and membership fee revenue of $1.5 billion. But Costco’s affluent shoppers are being more economical. “Our members are coming in and being a little bit more disciplined,” Galanti told stock analysts. “They are holding off on buying big-ticket items.”

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Web Passes Bricks and Mortar as Preferred Shopping Channel - Daily News for Wednesday, October 15, 2008
Online becomes shoppers` channel of choice, but not because of price

For the first time, the web has become the preferred shopping channel for multi-channel consumers, surpassing stores, says a new consumer survey from Chicago-based consultants and researchers The E-Tailing Group Inc.

The survey of more than 1,000 adults who shop online four or more times per year and spend $500 or more annually, reports that 49% intend to do their holiday gift buying online while 44% plan to do so in-store.

Of the top five reasons that consumers say they prefer shopping online, four are more important than saving money: 88% shop online to save time, 84% to locate hard-to-find products, 83% to access greater selection, and 83% to avoid crowds at malls. 80% cited saving money.

The survey also reports, however, that 52% of consumers plan to buy fewer holiday gifts this year. The average number of gifts is projected to be down from 16+ last year to 11-15 this year.

Although these consumers plan to buy fewer gifts and spend less for those gifts, 72% vs. 65% in 2007 plan to research products online before purchasing. 91% plan to purchase the same number or somewhat more gifts online, equal to last year`s spending level.

The No. 1 reason consumers don’t buy more online is the cost of shipping, the survey reports. “Setting a fair policy then monitoring it competitively and across the industry will be even more important during this cash-challenged holiday season,” the report says.

The survey was sponsored by e-commerce technology provider Art Technology Group Inc.

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