Costco Opens in China with Clicks Not Bricks

October 16th, 2014 · No Comments

Nǐ hǎo, China!  Costco has decided to take the faster (and less expensive) way into China by opening a virtual storefront on Alibaba’s Tmall Global.  They join the tens of thousands of merchants selling via Tmall to customers in China, Hong Kong, Taiwan, and Macau.  The site serves over 150 million buyers which could prove to be a huge shopping audience for Costco.  This should also be a good proving ground for Costco to gauge the interest of buyers in China, Hong Kong, and Macau where they do not yet have a physical presence.  Stores in other Asian markets – Korea, Japan, and Taiwan – have already proven quite successful for Costco.  Some of their most successful stores are located in the Asian market.

The Chinese retail market is growing rapidly as they have an ever expanding middle class that has a real desire to purchase imported goods.  Somewhere around 45% of the Chinese population is online currently and even that represents a huge new market for Costco, but of course that number is growing quickly too.  China’s ecommerce market surpassed the size of the market in the U.S. in 2013 to become the world’s largest, with $295 billion in sales versus $270 billion in America, according to McKinsey.

Costco opens a virtual storefront to serve the Chinese market

Costco opens a virtual storefront to serve the Chinese market

Costco has already launched their Tmall store front and they are selling items across four major categories: Health and Beauty, Baby, Snack Foods, and Home and Life.  They are selling a lot of their own Kirkland Signature items, but also items that this market doesn’t usually see, such as US brands like Ocean Spray.  And of course, if they do see these brands they are most likely not at Costco prices.  I am sure that once they get a feel for the market they will expand their offerings to give the Chinese buyers even more options.  Costco will be utilizing Alibaba’s data mining capabilities to help them determine the best products for the market.  Costco will be shipping goods direct from the US, but will also take advantage of Tmall Global’s warehouse stores would help it cut logistics costs and delivery time.  Just like Costco’s other ecommerce stores around the world, shopping at their Tmall Global outlet will not require customers to have a membership.

I’ve taken a spin around the virtual Costco and it is an interesting mix of products that we can all find in our Costco warehouses, and some that I’m not familiar with at all, but are probably found in their other Asian locations.  There is a lot of Kirkland Signature available, which shouldn’t be too surprising since they have an ever expanding selection of KS goods in the warehouses too.  I always find it interesting to see what products are offered in other Costco locations around the world, and this is no exception.  It’s like taking a trip without leaving my house really.  There are products that I find it surprising that they have on their site though, like: KS mens jeans, KS hiking socks, Swiss Miss instant cocoa, Sensodyne toothpaste, and Novafoam pillows.  They have a really interesting mix of products.  I found it really fun to take a look around (Google Translate is a big help if you decide to take a virtual shopping trip).

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