business news in context, analysis with attitude

Good piece in the New York Times over the weekend comparing the shopping experiences at Amazon vs. Costco:

“The older you get, the more valuable your time seems. And going to Costco, even though it’s just a couple of miles from my home, is generally a two-hour round trip by the time the driving, the shopping, the waiting in line, the loading of the car and the unloading back home are done. In 2007, meanwhile, introduced a service called Subscribe & Save. The premise is simple: If you agree to get a recurring shipment of an item, Amazon will cut 15 percent off its normal price and send it to you every one, two, three or six months without charging the standard shipping rate.”
However, in analyzing the numbers over a period of time, the Times columnist concludes that it is hard to draw hard and fast conclusions. Costco seems to be cheaper with a more limited selection; Amazon offers the convenience of automatic fulfillment and a broader selection, albeit mostly in large sizes that may not be for everyone.

“With a larger family, you’d be buying more at Costco, so the savings in dollars could be bigger,” the Times writes. “And if you can afford to do a year’s shopping at once (and have the place to store everything you buy), you can greatly cut down the time you lose to the Costco chore each year. Also, if there is a Costco next door to places you often go, you don’t have to make a special trip.

“Costco often sends out coupons that can yield $20 or $30 in savings per trip. That’s a good thing, since it allows you to potentially win back the $50 or more that most people pay in annual membership dues. The company also has a generous return policy.

“At Amazon, meanwhile, you have many more choices than you do at Costco, where your favorite brand of shampoo is probably not available.

“Amazon also doesn’t do such a great job of tempting you to buy household goods you don’t need. At Costco, you need to resist the siren call of, say, the red velvet cake or that funky Dyson bladeless fan.”
KC's View:
The real lesson here is that both Amazon and Costco offer specific value propositions that are preferred by specific customers at specific times. Neither one is right or wrong, or even better or worse. They are just specific and offer clearly stated differential advantages...and never would be accused of occupying the mushy middle ... which is what most retailers need to avoid.