Costco launches on-line Business Center - Brief Article

DSN Retailing Today, April 16, 2001 by Doug Desjardins

ISSAQUAH, WASH. -- In a move that's sure to increase its footprint in office equipment retail, membership warehouse club Costco Corp. recently launched a new on-line endeavor called Business Center to increase its reach within the small- and medium-sized businesses sectors.

The new site, which features an extended line of business products, launched March 19 as an adjunct to the company's existing on-line presence at costco.com. In addition to a wide selection of skus, the site features door-to-door delivery, which functions on two distinctly different levels.

Customers in San Francisco, Seattle and Los Angeles will be able to order a wide array of products ranging from computers to food for next-day delivery through Costco's own delivery service. People in other parts of the country will have a more limited line of products available for delivery through the United Parcel Service (UPS).

"We have more than 4,000 items available at the Business Center, everything from computers to file folders to furniture," said senior vp Doug Schutt. "We're very excited about this because it's a natural fit for us and our customers."

The on-line venture is also an extension of brick-and-mortar Business Centers that Costco operates in Seattle and San Francisco. The centers carry a wider range of business products than regular Costco warehouses and do walk-in business and deliveries.

Though it has only been up and running for a few weeks with little advance promotion, the online Business Center has already reached a wide audience. "We've had orders from all over the United States, so we're already busy," said Schutt, adding that Costco will begin promoting the new Web site in the near future.

The new venture is expected to bolster revenue in Costco's e-commerce business--which is expected to generate more than $100 million in sales during its current fiscal year-and make the retailer more competitive with other chains that specialize in office equipment.

Analyst David Schick said he doesn't see Costco's Business Center launch as a departure from its core business or a move against retailers who specialize in business and office equipment.

"Costco's a great retailer and merchandiser, and they're just taking their business to the next level," said Schick, an analyst with Robinson-Humphrey in New York City. "The Business Center will make them more competitive on business-to-business and consumer sales, but it's just a part of the company's overall goal, which is to deliver products at low price points to consumers."