Costco is probably one of the most fascinating retailer in the world. Despite tough macro economic situation, Costco still performs better than most of its competitors. Also, Costco is one of the fewest US retailer that experiences real success abroad, with 30% of its warehouses located outside the US.
Costco has developped its international strategy the past few years, with especially big plans in Europe, with the launch this year of operations in Spain, and forecasted operations in France for 2015.
But Costco made the news headlines this week by entering the Chinese market with a quite unusual approach. Indeed, Costco started its activities in China not by opening a warehouse, but by setting up an online partnership with E commerce leader Alibaba. What is even more surprising is that Costco has never really been a big fan of Internet sales, focusing on its core warehouse concept, which is thriving despite online competition like Amazon.
But in a country where Ecommerce rules, and where setting up a business means to have a partnership with a local company, this quite innovative approach is for sure a great idea:
- Ecommerce is a $175 billions business in China
- This partnership allows Costco to enter the business at a low cost
Now what will it mean for Costco in China. Will they open actual warehouses? Can we expect from them a 100% online strategy? I believe that once Costco will actually focus its strategy on China, there is a high leverage to be expected. What will be difficult for Costco is to set a strong brand in China online without the support of its warehouses.
For sure, Costco's journey in China will be one of the story to follow in the next few years.