It’s not the only reason, but e-mail marketing is playing a major role in helping Costco Wholesale Corp. dramatically boost its e-commerce sales. In 2004, Costco.com recorded sales of $376.6 million, up nearly 70% from web sales of $226.2 million in 2003.
Costco, which caters to a membership of affluent buyers with more than 40% having annual household income of more than $100,000, offers more than 4,000 online SKUs.
To increase sales Costco is very selective—and effective—in using e-mail marketing to increase traffic and sales conversions. For instance, Costco will not rent its list of 5 million e-mail names to outside parties or purchase or append outside lists, says Ginnie Roeglin, Costco’s senior vice president of e-commerce and publishing.
Costco is also very selective in using its e-mail list for very targeted promotional offers. “We try to limit our e-mails to truly valuable offers and hot buys that are worth our members’ time to read such as $1,000 off a Pioneer 50-inch Plasma TV regularly priced at $5,499.99,” she says.
As evidence of Costco customers’ upscale buying power, recent web sales included a $40,000 original Picasso crayon drawing and a pink diamond ring priced at $98,000.
“E-mail marketing is a very significant part of our e-commerce marketing strategy,” says Roeglin. “The average Costco customer is very upscale and appreciates a great value on top-quality merchandise.”
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