According to the "Shenzhen Release" WeChat official account, on January 12, the first Costco market opener in South China officially opened. It is reported that Kaishike Shenzhen Store is located at No. 68 Minda Road, Longhua District. It is the first flagship store in South China and the sixth store in the country, with a shopping area of 15000 square meters. It only has a one story hypermarket, and the three story parking lot has nearly 1000 parking spaces, equipped with charging piles.
Every time a new store is opened in China, American membership supermarket brand Costco (also known as "Kaike" in Chinese) is asked by consumers if the store has any "online delivery" issues.
With the opening of Costco's Longhua store in Shenzhen on January 12th, discussions on this topic have once again been sparked on social media platforms. In addition, some netizens have complained that Costco in Shanghai has not yet opened online delivery.
On January 11th, Costco responded to Interface News through its proxy public relations company, stating that the opening time of online delivery services in Shanghai is currently uncertain, and there may be further news after the Spring Festival.
In fact, as early as October 2022, it opened an "online delivery" service in Suzhou, covering the delivery area of Suzhou city. In 2023, it also added a daily delivery service. Afterwards, this business expanded to five cities including Wuxi, Nantong, Ningbo, Hangzhou, and Nantong, all of which were fulfilled by third-party companies through "picky shopping" for delivery and after-sales service.
The consumer's purchasing path is also redirected from the Costco app to the "Picking Shopping" mini program. The product prices on this shopping platform are 6% higher than those of Costco physical stores. They have also explained this in the product notes. In addition, the threshold for delivery fees is within a 10 kilometer radius of the store, with free shipping for orders over 199 yuan. Express delivery costs 299 yuan per package. In addition, although the Ningbo store has opened in 2023, Ningbo only supports express delivery, and all products are picked, packaged, and shipped by Costco Suzhou store.
Different from Sam's practice of establishing a front warehouse around stores, Costco's practice currently takes stores as the main warehouse, so delivery timeliness and commodity experience have repeatedly become the focus of consumers' roast. Some consumers on the social platform claim that "picky shopping" has poor service, few things, slow speed, etc.
For example, due to the inability to guarantee delivery time and a 6% increase in product prices, it has become a bottleneck. Some users have also complained on social media that fresh products cannot be refunded after delivery.
Currently, Costco has only 6 stores in China, including its Shenzhen Longhua store on January 12th. Although this brand has a greater global influence and profit margin than Sam, and there are over 410000 notes on "Costco" on Xiaohongshu, the company still appears cautious and conservative when entering the instant delivery business.
A retail industry insider analyzed that compared to Costco's imitation of the United States, they hope that Sam in the Chinese consumer market will also perform stronger in store marketing and affinity, such as encouraging consumers to try out and inviting Xiaohongshu bloggers to promote internet celebrity products.
For Costco, a more realistic factor is that building a warehouse requires consideration of the membership density within the store's coverage area, as well as the balance between product and delivery costs. Obviously, Costco's number of stores and membership density in China have not yet reached the level of expanding its front-end warehouses.
Compared to Sam, who has made significant profits through pre positioned warehouses, when preparing for pre positioned warehouses, he had already opened 20 stores in China with over 2 million members, and over the past 20 years, consumers have developed a certain brand awareness of Sam.
Sam's front warehouses were tested from Shenzhen Futian and Nanshan in 2018, and then extended to Shanghai stores, and finally gradually extended to stores nationwide. Sam invested in these front warehouses, but Sam and JD.com were jointly responsible for system construction and warehouse management, and the distribution was completed to Dada Express. At the same time, Wal Mart, which Sam belonged to, was also a shareholder of Dada, with 9.1% of its shares, This makes the cooperation between both parties closer.
Sam also experienced an outbreak period in China, during which his online shopping characteristics and hoarding behavior brought him higher business volume. In an article on the official account last September, Zhang Chenyong, a retail observer, mentioned that Sam currently has about 500 front warehouses in China. If 45 stores are counted, each store will drive 11 front warehouses on average. The daily warehouse orders are 1000, and the customer unit price is about 230 yuan, far higher than the break even point of 400 stores. Overall, it is expected that Sam's front-end warehouse will have an annual sales revenue of between 33 and 40 billion yuan.
Although Sam did not comment on the above data, Sam and Wal Mart China, behind him, saw their performance grow for five consecutive quarters. Wal Mart's third quarter financial report disclosed in November this year showed that Wal Mart's Q3 net sales in China were $4.5 billion (about 32.45 billion yuan), up 25.3% year on year, comparable sales increased 18.6%, and e-commerce net sales increased 38%.
In addition to the pre warehouse, Sam also launched a nationwide distribution service in 2021. In response to the characteristics of population mobility during the Chinese Spring Festival, as well as the needs of members for gift giving and personal use, Sam also launched a nationwide free shipping service with a time limit of up to 299 yuan. If the delivery fee is less than 299 yuan, it will be charged by weight. At present, Sam's nationwide distribution service has covered nearly 2000 products, and this flexible localization strategy may bring more new members to Sam.