While the growing competition between Amazon.com and Walmart is the stuff to which many commentaries have been devoted, Bloomberg Businessweek has a piece that looks at the cross-town rivalry between Amazon and Costco, both of which are headquartered in the Seattle area.
Some excerpts:
• Costco is thriving, but Amazons’s relentless expansion looms over the second-largest retailer in the U.S., as it does every other retailer. The online giant is moving rapidly into apparel and is reportedly set to expand AmazonFresh, its Seattle-only grocery delivery business—two categories that are key to the continued vibrancy of big-box behemoths such as Wal-Mart Stores (WMT), Costco, and Target (TGT).
• Costco executives watch Amazon closely and believe the companies share a lot of cultural values, such as frugality and an interest in building for the long term. Like everyone else, they also marvel over the fact that Wall Street allows Amazon to get away with nearly nonexistent profit margins.
• Costco executives are not blind to the Amazon threat, and they talk in vague terms about evolving to meet the challenge. “It’s obviously a huge point of discussion around here,” says Paul Latham, vice president in charge of membership, marketing, and services. “We view Amazon as one of our primary competitors in almost every category. We all believe we are going to have to adapt in some form.” Latham also adds that “there’s a recognition that at some point Amazon has to start making money. They can’t continue on their current path of just pouring everything back into more infrastructure.”
You can read the entire piece here.
Some excerpts:
• Costco is thriving, but Amazons’s relentless expansion looms over the second-largest retailer in the U.S., as it does every other retailer. The online giant is moving rapidly into apparel and is reportedly set to expand AmazonFresh, its Seattle-only grocery delivery business—two categories that are key to the continued vibrancy of big-box behemoths such as Wal-Mart Stores (WMT), Costco, and Target (TGT).
• Costco executives watch Amazon closely and believe the companies share a lot of cultural values, such as frugality and an interest in building for the long term. Like everyone else, they also marvel over the fact that Wall Street allows Amazon to get away with nearly nonexistent profit margins.
• Costco executives are not blind to the Amazon threat, and they talk in vague terms about evolving to meet the challenge. “It’s obviously a huge point of discussion around here,” says Paul Latham, vice president in charge of membership, marketing, and services. “We view Amazon as one of our primary competitors in almost every category. We all believe we are going to have to adapt in some form.” Latham also adds that “there’s a recognition that at some point Amazon has to start making money. They can’t continue on their current path of just pouring everything back into more infrastructure.”
You can read the entire piece here.
- KC's View:
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I don't disagree with anything in this assessment. I think that Amazon is building a long-term business without much concern for immediate profit, believing that sustainability and market share are ultimately more important in the short-term. And, I think that the Costco is smart enough to know that nobody - nobody - is Amazon-proof.
It is the companies that think they are somehow immune from any impact from Amazon, who think they will be unaffected by competitive battles being fought by the likes of Amazon, Walmart, Costco and Target, that will be at a disadvantage.
