Looking to get your product into Costco?
Costco is the second-largest retailer globally after Walmart. However, interestingly it has the most loyal customers in the world. Customers of Costco believe it to be the best place to purchase goods and prefer it to all other retail establishments worldwide.
Originally founded as Price Club in 1976, Costco has evolved into a major retailer, servicing not just small businesses but also a vast consumer base with a strong reputation for quality and low prices.
Costco offers you a wide range of channels through which to market your goods to consumers, all of which have a track record of success. Getting your product into Costco may be exactly what you need to help you achieve your own level of success, depending on what it is that you are selling.
Selling at Costco can help you gain immediate credibility and build your own audience. However, only approved products are allowed on Costco’s shelves. In this article, you will learn how to sell at Costco and about all the procedures you should be ready for. Let’s first examine why you should try to sell at Costco before you make any effort.
Understanding Costco and Its Opportunities
Costco Wholesale Corporation is a membership-based American multinational retailer that operates a chain of warehouse clubs. These clubs offer a wide selection of products, including fresh produce, meat, dairy products, packaged goods, electronics, clothing, and home goods. With over 118 million members worldwide, Costco provides a vast customer base for suppliers to tap into. This extensive reach makes Costco an attractive platform for businesses looking to expand their market presence and increase sales.
What Is Costco Wholesale Corporation?
Costco Wholesale Corporation is renowned for its unique business model, which focuses on selling products in bulk at competitive prices. This approach not only attracts a loyal customer base but also ensures high sales volumes for suppliers. The membership model further enhances customer loyalty, as members are more likely to return for the value and quality they receive. For suppliers, this means a consistent and reliable market for their products.
Benefits of Becoming a Costco Vendor
Becoming a Costco vendor offers numerous benefits, including:
Exposure to a Vast Customer Base: With millions of members worldwide, Costco provides a platform for suppliers to showcase their products to a large and loyal customer base. This exposure can significantly boost brand recognition and customer trust.
Increased Sales: Costco’s bulk purchasing model allows suppliers to sell large quantities of their products, leading to increased sales and revenue. This model is particularly beneficial for products that perform well in high-volume sales environments.
Improved Brand Visibility: Costco’s reputation for quality and value can enhance the perceived value of a supplier’s product. Being associated with Costco can influence consumers’ purchasing decisions in favor of the supplier’s brand.
Opportunities for Growth: Costco’s global presence and e-commerce platform provide opportunities for suppliers to expand their business and reach new markets. This can lead to long-term growth and sustainability for the supplier’s business.
Why Sell Your Product at Costco?
Millions of people will see your product if you can get it into Costco, both online and in actual stores. There are 118.9 million Costco members, per a Statista report. Members who are willing to put their trust in you and who might end up being loyal customers of your brand. Understanding Costco’s target market is crucial to maximize sales potential, as it helps tailor your product to meet the specific needs of their customer demographics. Let’s look at some of the reasons you want to sell your product at Costco.
Customer Loyalty
Costco is a worldwide warehouse club open to members only. As of 2022, there are more than 118.9 million members. Over 90% of those millions of people continue their memberships. This demonstrates that customers trust Costco to offer high-quality goods at competitive prices
Reputation
Costco is well-known for its great reputation. People rely on Costco to provide them with a wide range of high-quality goods. Since Costco only carries about 4000 SKUs, the items on the shelves are carefully chosen. Additionally, it has been demonstrated that a small selection size boosts customer confidence.
Locations
Costco has a sizable retail presence. As of 2022, Costco has 842 warehouse locations worldwide, with 579 of those being in the United States. After the surge in March 2020, Covid-19 caused a decline in foot traffic, but online traffic has increased by more than 64%.
To better understand market demands and observe competing products, it is advisable to visit a local Costco and interact with store managers.
Stability
Costco has survived difficult economic times. Costco is currently the third-largest retailer in the United States. Despite negative effects on the world economy, the company keeps expanding.
Things to Remember Before Selling at Costco
Before you sell at Costco, be ready for a ton of paperwork. You must register yourself and establish your “worthiness” before you can begin.
Costco’s customers are extremely devoted to the platform because not everyone is allowed to sell there. Here are some additional requirements if you want to sell at Costco.
Membership
You must be a member in order to sell at Costco. Costco membership is required for both buyers and sellers before they can begin selling.
Pricing
Make sure your product is price-proof. First of all, you will undoubtedly face competition from companies that can offer their goods at a discount. List your top products that are highly valuable to the customer and cost the least in the marketplace. Emphasize the importance of bulk packaging to meet Costco’s pricing guidelines, as offering products in bulk can help you align with the store’s reputation for selling items at discount rates.
Sale Model
Recognize the Costco sales strategy. They provide premium goods for less money. How do they manage to do that? by making a lot of sales! Therefore, to maximize sales as a Costco vendor, package your goods in bulk.
Best Sellers
Choose the best-selling products. In other words, if you’re just getting started, focus on the best-selling items rather than trying to carve out your own niche. The most popular items at Costco are food-related products.
Sales Channel
Choose your sales channel carefully. In other words, Costco gives you the choice of selling your goods offline or online. And while anyone can buy through the online channel, Costco members are the only ones who can buy offline products. Selling through Costco’s online store offers significant advantages, such as the potential for success regardless of physical store competition and the importance of having a fully-functioning website to integrate with Costco.com. In the following sections of the article, we will talk more about these sales channels.
All businesses that want to sell their goods at Costco must adhere to a certain ethical standard, regardless of their products or vendor strategy. When applying to become a Costco vendor, the following three things should be taken into consideration:
a) Costco demands that its vendors forbid forced labor, physical abuse of workers, and child labor that is not legal.
b) Costco demands that its suppliers abide, at the very least, by the relevant labor and environmental laws and rules of the nation where the goods are produced.
c) The “Above and Beyond Goals,” which are ongoing improvements to employee working conditions and environmental protection, are something that Costco actively encourages its vendors to work toward.
Key Characteristics of a Successful Costco Supplier
To become a successful Costco supplier, it is essential to understand the company’s requirements and expectations. Here are the key characteristics of a successful Costco supplier:
How to Get Your Product into Costco
Finally, here are the steps for selling at Costco. As was mentioned above, you have two options for where to sell your goods at Costco: online or offline.
STEP 1: Prepare Your Product and Pitch
In order to get started, you must first complete the Costco vendor application and see the Costco regional manager. You will be questioned about your companies, products, other financial matters related to your products, and your marketability in this section.
Before contacting Costco, suppliers should prepare their product and pitch by:
Ensuring Quality and Pricing Standards: Make sure your product meets Costco’s stringent quality and pricing standards. This includes offering high-quality products at competitive prices that align with Costco’s value proposition.
Developing a Compelling Product Pitch: Create a unique and compelling product pitch that highlights the product’s features, benefits, and value proposition. Your pitch should clearly communicate why your product is a good fit for Costco’s shelves.
Gathering Relevant Data and Market Research: Collect data and conduct market research to support your product’s potential for success. This information will be crucial in convincing Costco’s buyers of your product’s viability.
STEP 2: Contact Costco Buyer and Submit Your Product
You can either represent yourself through the process on your own, or you can hire a broker. Your application is sent to the Category buyer once the regional manager has given it the go-ahead. This person will determine whether or not your product can be sold at Costco.
Once prepared, suppliers can contact Costco’s buyer and submit their product for consideration. This involves:
Researching and Identifying the Relevant Buyer: Identify the category buyer responsible for your product type. This step is crucial as it ensures your proposal reaches the right person.
Submitting a Detailed Product Proposal: Prepare a detailed product proposal that outlines the product’s features, benefits, pricing, and market potential. Your proposal should be thorough and professional, showcasing your product in the best light.
Following Up with the Buyer: After submitting your proposal, follow up with the buyer to discuss the product’s potential and answer any questions they may have. This step demonstrates your commitment and willingness to collaborate.
STEP 3: Costco Approval and tips to prepare
Be aware that your chances of being approved will decrease if you attempt to sell a product at Costco that is already available there. Only then do you have a chance of having your product chosen quickly: only if you are providing distinctive goods that customers might actually be interested in purchasing.
After you are chosen by Costco, a team will eventually show up to inspect your workplace and work standards. Therefore, make sure that you are abiding by all labor laws and providing a safe workplace for your employees.
By following these steps and understanding Costco’s expectations, you can increase your chances of becoming a successful Costco supplier.
Offline
You will be qualified to sell your products at Costco once they have verified you with the team there. Keep in mind that your products may appear at roadshows or events rather than being displayed on shelves from the start.
Securing shelf space is crucial for product visibility and sales potential, as it allows your brand to stand out in the competitive retail environment.
Your product will move up the list of Costco products as soon as members begin demonstrating interest in it through purchases.
Online
Selling products on Costco’s website is the same as doing so offline. When signing up, you must provide all the necessary information. Additionally, you will require a website for your product that you must link to Costco.
However, selling products in Costco stores involves different challenges and considerations, such as demonstrating a product’s potential success, managing stock volume, and developing a pricing strategy suitable for bulk purchasing.
And now you are prepared to sell at Costco.
Costco Roadshow
Brands and Costco can test the vendor model in a private setting through Costco Roadshows.
The Costco Roadshow, which is frequently promoted as an interactive event or pop-up market, is held in particular warehouses at particular times. Each company that participates in the Costco Roadshow is in charge of staffing its booth and providing and stocking inventory.
Products for the roadshow are consigned, and the supplier is paid based on sales. Your chances of becoming a Costco vendor increase dramatically if the products’ performance astounds the regional managers.
Final Thoughts
As you can see from the article above, Costco is one of the platforms with the fastest growth. Selling your products at Costco has the potential to accelerate your brand’s rise to stardom. Alternatively, you can sign up with a distributor that has a track record of success representing its brands at Costco, or you can take the long route and call the Costco office.
Once you’ve successfully gotten your product into Costco, you will need a system to centralize your products and streamline your sales process. Therefore, consider using mobile sales software or B2B order-entry software to facilitate your sales process, both offline and online. For more details, please contact Orders In Seconds.
Technology in Retail: How Costco’s Competitors Are Closing the Gap
Costco’s competitors, such as Sam’s Club and BJ’s Wholesale Club, are employing various strategies to narrow the gap with the retail giant. They are investing heavily in technology to enhance the customer experience, offering more curated product selections, and expanding their omnichannel capabilities. By focusing on convenience, personalization, and a wider range of offerings, these competitors are gaining ground in the warehouse club market.
How to become a Costco supplier
Becoming a Costco supplier is an excellent opportunity for businesses to gain exposure to a vast customer base and establish a strong foothold in the retail industry. To increase your chances of success, it’s crucial to understand Costco’s stringent requirements and demonstrate the ability to meet their high standards. Costco is committed to supplier diversity, providing opportunities for qualified local minority-owned and women-owned suppliers within the communities they serve. Familiarize yourself with their product sourcing guidelines, ensure your offerings align with their core values, and showcase your commitment to quality, consistency, and ethical practices. By presenting a compelling proposal and demonstrating your value proposition, you can pave the way for a successful partnership with Costco.
