Costco Quietly Kills Costco Next Marketplace | Fast Five Shorts

Costco has quietly shut down Costco Next its member only online marketplace, without any advance notice to shoppers.

Costco Next lets members buy products never or let I should say Costco Next used to let members buy products never stocked in warehouses directly from vetted third party suppliers, including brands like Priority Bicycles and Viking Culinary at exclusive member pricing with vendors handling shipping and returns.

The program launched in 2017 and expanded over the years to dozens of partner brands as an asset light way for Costco to broaden its assortment without holding inventory.

Costco's customer service page now displays a notice that access to Costco Next storefronts is no longer available, directing members to individual vendors for eligible returns and warranty inquiries.

The shutdown reportedly came without warning.

Regional outlets first reported the closure around September 1, and many members say they only learned the service existed as it was disappearing.

Shelley, how should we read the tea leaves around Costco shutting down its online marketplace?

Costco Next Well, I think this is.

Interesting and it was a natural step for Costco to try a marketplace because everyone was and a lot of retailers thought marketplace is the future and it still might be.

And so it was natural for Costco to step into this space.

They did it relatively early.

If you look back, I think it was.

That's a good point.

2017.

Yeah, 2017.

But at this point they've captured a lot of data around it.

And so Costco has one of the strongest trust relationships in retail.

So this actually introduced a level of complexity into that relationship and it may not have had the incremental improvement that they or assortment that they actually needed.

And so online Costco already has a broader first party assortment than they do in stores.

So they're already capturing and trying different items in addition to, you know, their store assortment.

But when you look at marketplace, somebody still has to vet all the suppliers, maintain quality standards.

There's another what layer of customer service.

You created a whole different ecosystem.

And then even though the vendor marketplaces can be efficient because they own fulfillment and returns, it still might not be efficient.

When you look at the entire Costco ecosystem because of all of those other things we just discussed before, I think this is something Costco tried.

It was probably like if we delete it, who cares?

And Costco is incredibly trusted and does what they do in a really excellent way.

So I don't know that consumers are really going to be bothered by this at the end of the day.

Yeah, Costco does everything with conviction.

I'm curious.

Shelley, I have an opinion on this, but I'm going To ask you first, do you think any club should have a marketplace?

When you look at the club business model, it doesn't necessarily make sense for them and that.

And so that's if an item's big enough to be meaningful, it'll end up in a club anyway.

I actually think the club websites with broader assortment or great testing ground for what should be put in clubs.

And so I think the business model doesn't necessarily yield itself to that being effective for any club.

I 100% agree with you.

100% Agree with you.

Yes, I agree.

I think the club business model is just different.

And I say that, and I say that.

Everybody listening like I'm an advisor for Miracle.

Miracle is a sponsor of this podcast.

Their business is marketplace.

And Shelly, to your point, E Commerce overall, globally is a marketplace business.

Like it's the bulk of the volume, it's the bulk of where growth is coming from.

But I don't like marketplaces for clubs.

I think if clubs want to quote unquote, extend the aisle, they should do it themselves by sourcing the same great value deals they would put into their stores, but just don't have the room to do so.

And the big reason being for me is what you said, Shelley.

It keeps the customer relationship start to finish because unlike other retailers, the trust that comes when I'm paying a membership fee to shop with that retailer is important.

It puts a premium on the service and quality that I expect, which this is the other point I'd make, Shelley, and I'm curious what you think on this.

That psychological bond is different to me than a delivery membership like prime or Walmart plus with those, I'm not paying for the privilege to shop like I am in a club.

So while I generally espouse every vertical to have a marketplace strategy, I don't think clubs should look at it.

I 100% agree with you.

And I would also add because I called on a lot of different retailers when I was a manufacturer and a supplier, I think Costco has the best, most customer focused merchants in the business and they do not make any decisions haphazardly.

And every decision they make is to provide more value to consumers and to their members.

And so I think that they're just world class in how they look at things like this and how they make those decisions.

Think trust is one of the highest in retail as a result of that.

So I completely agree with you.

Yeah, it's amazing how much benefit of the doubt we give the reputation of the retailer when talking about these headlines.

Every week.

But Costco, rightfully so, deserves that benefit of the doubt at the end of the day, so.