Costco expands digital footprint

Costco Wholesale Corp is accelerating its digital expansion in China, deepening competition with Walmart Inc's fast-growing Sam's Club as the US warehouse retailer seeks to broaden its reach beyond a limited store network.

The company recently launched its first official flagship store on JD, marking its first partnership with a major Chinese e-commerce platform. The online storefront offers direct-operated merchandise with products aligned with Costco's warehouse clubs.

The launch also introduces Costco's membership-based pricing model to a broader online audience. Active members receive the same prices available in physical stores, while non-members pay roughly 20 percent more.

Its Kirkland Signature 140 pacs (2.52 kilograms) UltraClean laundry detergent, for example, sells for 89.9 yuan ($13.29) to members versus 109.80 yuan for non-members.

Its store on JD joins the company's existing digital channels, which include its proprietary app and mini-program. The move underscores Costco's efforts to adapt its business model to the country's highly digital retail landscape, where online shopping and rapid delivery have become mainstream consumer expectations rather than supplementary channels.

Costco currently operates 928 warehouses and serves about 140 million members globally. Since entering the Chinese market in 2019, the retailer has opened seven stores, including two in Shanghai. An eighth location is expected to open in Quanzhou, Fujian province.

Costco currently offers two membership tiers in China: a Gold Star membership priced at 299 yuan annually and an Executive membership priced at 688 yuan. The premium tier, introduced in April, provides a 3 percent reward on eligible purchases and mirrors a strategy long employed by Sam's Club to deepen customer loyalty and increase spending.

JD Logistics will handle fulfillment for the new online operation. Next-day delivery is available in major cities including Beijing, Shanghai, and Guangzhou, Guangdong province. However, Costco's orders require a minimum spend of 199 yuan, with base shipping fees starting at 20 yuan for orders of up to 12 kilograms. No free delivery option is currently available. In comparison, Sam's Club ships for free at a minimum spend of 99 yuan.

The higher delivery thresholds reflect the structural challenge facing Costco in China. The company's low-margin, bulk-purchase model relies on large basket sizes, making last-mile logistics more expensive to subsidize.

That challenge is becoming increasingly apparent as Sam's Club strengthens its position in the membership retail sector in the country.

Walmart's China operations continue to gain momentum, driven largely by Sam's Club and e-commerce growth. Walmart reported first-quarter fiscal 2027 net sales in China of $8 billion, up 22.3 percent from a year earlier. E-commerce sales rose 31 percent and accounted for half of total revenue, an increase of 335 basis points from the previous year. Sam's Club added nine stores over the past 12 months while maintaining double-digit transaction growth.

Walmart Chief Financial Officer John David Rainey said during the company's earnings call, "The team delivered over half a billion units in the first quarter, with about 75 percent arriving in under one hour."

Another membership store, Maidelong, or Metro China, of the Wumart Group, has recently reshuffled its top management, installing retail veteran Andrew Miles as executive chairman. Miles previously held senior roles at Walmart China and led the expansion of Sam's Club China.

wangzhuoqiong@chinadaily.com.cn