Costco To Design A Strategy That Will Lead To Success In The Amazon Environment

Costco and Amazon the two Big-Box Retailers of their own sector, one is king of E-commerce Amazon and another one masters the in-store retailing Costco. This both works on the B2B method of trade. One gives all types of the small service provider a platform to do business and other deals with big giants at a sharp edge price at huge scale orders which enables to give the product at least price. Costco knows how to provide a good Price Value to its customer. Costco is immune to Amazon on many aspects, but for now. Amazon has its total sales online, and it’s a platform for the consumers who are searching for some definite products as it has a huge collection to offer but they don't have consumers who are looking for consuming a huge amount of the same goods in one transaction, no doubt there are stacks of transaction for one good goes on but all for different users and not for one individual.

As on another side, Costco has users who love to take their orders in one big basket of much larger quantity. Costco provides a culture to their consumer for buying a specific amount of goods at the least rate in the market which is entertained by big families and small business and gives the experience is known for, as it has the testing floor open to all. Such an arrangement are always a source of attraction and entertainment. Costco's policy to focus on only a few of the brands and to bulk pack with the least rate. This is where they get their large customer base. Costco is very popular for its grocery and household. So the comparison of the Amazon and Costco are on very different levels and also in different customer sections so Costco was immune till now. Costco has not been harmed by Amazon in the beam of the fact that dissimilar to numerous retailers regardless it offers customers motivation to get off their lounge chair and come into the store.

One remarkable draw for the distribution center club that the online retailer has not possessed the capacity to rival its staple advertising. But Might won't last long, Costco cant be stay immune for Long if they don’t improvise or make necessary correction comparing to the others in the retail sector. Here Amazon is playing Alternative Value Proposition Card over the customers, Amazon is trying their best to provide everything to customers on one platform under one banner. But Costco introduced two types of home delivery system on their grocery to their loyal customers from whom Costco gets Membership fee which also helps in getting the best discount on Costco products. Still, this isn't enough for Costco to keep itself immune from Amazon as they also provide such service to Amazon Prime members at $99. Still, Costco is preserving its place in the market and between consumers but they have to get advancements as the time passes.

Costco

Strengths

1. Has its own Market existence
2. Offers sharp edge price on all the products they offer.
3. Strong Brand Image.

Weakness

1. A limited amount of brands for sale.
2. Works on very less profit margin.
3. Discounts only for members.

Amazon

Strengths

1. Amazon is a Marketplace.
2. A large variety of products for sale.
3. Promotes all kind of third-party seller.

Weakness

1. Minimal Store Presence (No real touch to customers).
2. Have to work in low profits due to high competition in the sector.
3. Has to deal with issues sold by other sellers.

How should Costco react to the Amazon threat? Besides create a more competitive website, is there anything that Costco could do to leapfrog competitors on the e-commerce side?

AAccording to me, Costco should sensitively react to the threat. They cant Ignore and move on with the problem and can't even show that they are feared from the Amazon. Here the Costco management should come up with some strategies for Expansion in products and in location also. Where there is a threat there always an opportunity to improve and do better, that’s what I think. Here this threat is just to alarm Costco and to provide them the opportunity to diversify, for example, through the expansion of new administrations or a completely new business in another industry. The organization could likewise extend its item combine, or, in other words, contrasted with those of firms in a similar division. Costco has the chance to extend its business around the globe by opening new distribution centers/stores in abroad areas, particularly in high-development economies. Competing on the E-commerce platform is most on the Graphical Representation of the website and features that site presents. Other than this E-commerce today is all about the offering, Innovation In Offering is the main aspect to this retail world. To take Leapfrog and move ahead of the competitors Costco Certainly needs to work on their GUI (Graphical User Interface) with all their product on the shelf with attractive offers and combos. Introducing the Reward system for the consumers can be a great start. This days rewards and the coupons and discount that are earned have a great value within the consumer.

Collaborating Costco with certain online websites, which generally offers prizes and gifts, through which they can market to those people who normally don't prefer to come to Costco or to introduce in certain areas or regions that are not still the customer base of Costco. Online advertising has its own impact nowadays through social media. Offering Customization over the online portal, such as consumer should select the certain quantity of different products of the same brand. So that’s gonna make consumer who loves customize menu more into this online offering. In-store already has its own Standardization fan following going on through Loyal Consumers. These are the certain ideas on which Costco can work and can achieve success.

How does Amazon’s recent purchase of Whole Foods threaten Costco? What should Costco do in response?

The Merger has affected the Costco market to some extent. Amazon who got the Whole Foods under their banner cut down the prices of Whole Food Grocery which damaged Costco hard by hitting their 5% of the share price in August 2017. This was a significant early shock of the merger. Its been said by some analysts that the price cut on Whole Food Grocery drastically gained the traffic over the web portal and also in the in-store. In which there might be approx 15% of the traffic came from the Costco consumers, which can be a big statement for Costco. Thus this merger is definitely damaging the Costco regarding its brand image of Low-Cost Retail Hub. This merger had certainly rung the bell in Costco hierarchy but didn’t able to do that much of damage over time. But that doesn’t mean that Costco Staying in its own space won't is penetrated, they need to restructure their shell through different advancements over time. Costco needs to upgrade at every aspect in today's market. Costco has two essential canals. The first is the estimation of its image:

After many years of Costco giving dependably low-valued merchandise and strong client benefit. The other canal comes by means of ease generation. On the off chance that Costco didn't charge yearly enrollment expenses, the organization would hardly be profitable. Its membership earnings about equivalents its pretax benefit, implying that everything else is sold at the leanest of edges. These canals are the modus operandi of Costco which made its existence in the market and created a strong Brand Image. With all of the above positive points available with Costco, they need to mainly Focus on the Customer Sweet Spot through enhancing brands likability and credibility within consumers and also to give them emotional attachment with the brand so that whenever they go for their household shopping they can emotionally attach with the Costco outlet and feel special. They really need to create a culture or environment within the outlet so that the users take their sweet and memorable moments with them. They Might also Innovate their way of Offering for their consumers which can attract the attention of people and can draw as many customers to their store as possible. They need to improvise their way of marketing to fight with their competitors. They basically need to Energize their Brand and Marketing power. This will certainly increase their customer base and with the vast customer base once can generate high revenues with low-profit margin.

All the retailers no matter how big or small they are, are establishing a strong E-commerce platform for their products which ease the access to the virtual store. This virtual store strategy must also be performed and should be Implemented moderately.

For me, Costco should consider going for a Strategic analysis for the brand in the market, through which they need to target those consumers who don’t prefer Costco and go for other brand and need to take out so Questionnaires for them to answer from which Analyst can derivate some conclusion and make up some strategy supporting to target such Non-performing Consumer Base.