Apart from bolstering its physical presence, the company is also focusing on its ecommerce business, Costco Online. The ecommerce initiative has been deployed in the U.S. and Canada, and in the U.K. as well of late. The company saw a 20% jump in ecommerce sales in the previous quarter and this should improve with expansion into other geographies. The online business would come in handy when competing against the likes of Amazon.com, Inc. (NASDAQ:AMZN).
Amazon.com, Inc. (NASDAQ:AMZN)’s Prime service was expected to be a threat to Costco as members of the service would get free two-day shipping, unlimited video streaming, and access to the Kindle Library for just $79 a year. In the ecommerce age, a service such as Amazon.com, Inc. (NASDAQ:AMZN) Prime has the potential to knock the wind out of the sails of brick-and-mortar retailers, but it seems like a trip to Costco is more cost-efficient.
Also, the fact that Costco’s members pay a membership fee, they would be utilizing it to make purchases from the warehouses or its ecommerce portal rather than looking somewhere else.
Great on all counts
In addition, given the fact that Costco Wholesale Corporation (NASDAQ:COST) takes good care of its employees, shoppers would get good service at the warehouses. The company’s exemplary employment policies and good wages don’t just help it save costs by keeping employee turnover very low, but also puts its customer service on a higher plane.
A well-paid Costco employee would serve you better than at a place such as Wal-Mart Stores, Inc. (NYSE:WMT). Employee unrest at Wal-Mart Stores, Inc. (NYSE:WMT) has been well-documented across the web as the company has been reported to pay very low wages to employees. Cases of theft, poor working conditions, and sometimes wages not being paid have marred the company’s reputation.
Thus, Costco Wholesale Corporation (NASDAQ:COST), like a socially responsible company, ticks all the right boxes and looks like the Mr. Right which you can always count upon to deliver on all fronts.
Considering everything, Costco has a lot of room to grow, its brand is as solid as ever, it keeps everyone happy — be it customers, employees, or investors — and as such, a premium valuation shouldn’t be a deterrent if you’re thinking of investing in this impressive company.
The article This Retailer’s Expensive Valuation Is Warranted! originally appeared on Fool.com and is written by Harsh Chauhan.
Harsh Chauhan has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and Costco Wholesale (NASDAQ:COST). The Motley Fool owns shares of Amazon.com and Costco Wholesale. Harsh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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