Monday, July 27, 2015

Costco outperforming pure players in the E commerce competition

Costco is really a fascinating company...

The Internet Retailer Top 500 E-commerce sites ranking has been released. The purpose of this ranking is to study which are the best performing e-merchant websites.

For this study, Dynatrace aggregates scores on four subcategories to create an overall score. Each retailer’s ranking in each subcategory is also reported in the index. Here are the four subcategories:

  • Mobile: tests pulling up the mobile page across mobile carriers, 
  • Last Mile: test running from real end-user machines running in homes and businesses across the U.S. 
  • Web: test hitting the home pages of each retailer from network nodes
  • Transactions: tests which search for a product, add it to a cart and checkout. 

 Each ranking is created by examining:
 1) Response Time: how fast to execute that transaction.
 2) Availability: how successful were we at executing the tests.
 3) Consistency: how much variability there was in the results.

What has made the headlines is the fact that Costco has been ranked n°11 of this website. Even though Costco has been pushing its online strategy, Costco is a hard core retailer focusing on operational executions to deliver sales growth. But what is interesting on this ranking is to notice how much operational execution is key to online success. Hence, Costco, by having an efficient e-commerce website, is able to maximize customer experience (even by proposing a minimal one), and therefore to out perform some other pure players, that we might have expected to be above Costco. Moreover, Costco out performs Apple!

Efficient operational execution remains key in retailing, no matter where.