Costco vs. Amazon: No knockout punch in sight

To me, Costco and Amazon are about as perfect a complement as can be found anywhere in retail. They’re both highly customer-service focused, treat customers well, and make it relatively easy to get positive outcomes no matter the circumstances. (Costco, however, does seem to outshine Amazon when it comes to employee treatment.)

Fierce competition between the two is addressed in an August CNN Business report:

“Retailers around the world are radically reshaping their strategies to contend with Amazon. Costco has a different tactic: Perfect what’s been working for four decades…Costco…has created a bulwark against Amazon…by keeping a lid on costs and using membership fees to offer better prices than competitors…‘Costco wants to be the last to have to raise prices and the first to lower them,’ said Mark Cohen, the director of retail studies at Columbia Business School…Costco has a sizable customer overlap with Amazon, especially among wealthier shoppers. It’s a looming danger for Costco if those shoppers decide they don’t want to pay for both…But the company has defended against its Washington State neighbor through low prices, offering fresh food and gas, and creating a treasure hunt buying experience that can’t be copied online.”

The report continues,

“‘Shoppers will use Amazon to replace physical shopping experiences that are chores or that they don’t enjoy,’ said Kantar Retail senior analyst Timothy Campbell. ‘Even as many shoppers consolidate their trips into fewer retailers or go online, Costco isn’t one retailer they consider cutting from their list.’… Groceries have positioned Costco to stay ahead of the field. Stifel surveys have found that 93% of Costco members shop at the club for grocery, but only 18% use Amazon to stock up on food…Costco has been trying to strengthen its fresh foods, recently announcing a partnership with startup Zest Labs to make sure produce stays fresh longer. It has also rolled out two-day dry grocery delivery and same-day fresh delivery through Instacart.”

This complementary appeal comes into play for me on almost a daily basis. My default is Costco for items I know the store carries. For everything else, I generally look to Amazon. On occasion, there’s a bit of “haggling” between the two. For example, last week I needed a new external computer hard drive. Costco generally carries them, but I wound up ordering from Amazon because they had a wider variety of well-priced options, and with my Prime account I knew it would be here in two days without me going anywhere.

In contrast, when my Surface Pro 4 computer crashed recently, I immediately charged to Costco for a replacement. I could have shopped Amazon, but didn’t have the time or inclination to browse the selection. And I know I have 90 days to bring back the computer at Costco if need be, versus having to ship it somewhere. All in all, I still much prefer Costco for a comfortable buying experience with high-ticket items.

And, the “treasure hunt” feeling up close and personal at Costco is a form of entertainment for me—not unlike surveying my favorite toy store as a kid. After almost 20 years, it hasn’t gotten stale.

So, I see the two behemoths continuing to complement one another until or unless something cataclysmic occurs—e.g., Amazon establishes a huge brick-and-mortar presence or Costco scales up its online platform to rival Amazon’s.

The common thread between these two is that they concentrate first and foremost on the customer’s needs, period. When I’ve had issues either place, resolution has been swift and overall satisfying. Pricing is a plus. And reliability is strong.

Now and for the foreseeable future, that will keep these two companies at the top of my shopping list—and make it much easier to eschew the rest most of the time.

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This the third of a four-part series on companies exemplifying superior customer service and employee treatment—and the rewards accruing their bottom lines and shareholders in the process. It’s a win-win model that exposes the zero-sum gain model of “I win, you lose” as an absurd and ineffective way of doing business. You listening, Donald Trump?

ICYMI: PART 1: Costco prioritizes customers, employees over shareholders
ICYMI: PART 2: Drilling down further into Costco’s formula for success

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Mark Lusky is a veteran writer, storyteller and author, with 40+ years of public relations, advertising, marketing and journalism experience. Author of A Wandering Wondering Jew… and co-author of Don’t Get Mad, Get Leverage,  Mark (aka The Happy Curmudgeon) is the owner of a Denver-based marketing communications firm celebrating 36 years in business in 2018.