E-Commerce Marketing Strategies And Applications: A Case Study Of Costco Wholesale Corp

Costco Company

Discuss about the E Commerce Marketing Strategies and Applications.

E-commerce or electronic commerce is a business that encompasses the transmission of information via the internet. E-commerce is a medium that has enabled consumers to comfortably exchange services and goods electronically without the restrictions of either distance or time. E-commerce has proven to be a force to reckon with, bridging the gap and making it possible to transact electronically at a cheaper and faster way. E-business, on the other hand, is the applications and information systems that use web technologies to not only support but also drive business processes. E-business increases business performance by allowing enterprises to create ties of their in-house and peripheral practices with consumers to improve their business performance (Beynon-davies 2013). Many are times e-business has been mistaken for just websites. Astonishingly, the website is just one of the many common applications of e-business. This essay will focus on Costco Wholesale Corp and the strategies it has used to be a leading enterprise in e-business.

Costco Whole is the second largest retailer in the United States. It boasts of a market cap of $66 billion hence falling at top 20 companies in Fortune 500. It is based in Washington. It operates approximately 1000 warehouses in the United States of America and overseas. It was founded in the year 1983. In the year 1993, the company amalgamated with Price Company. This formed PriceCostco.  It later changed its name to Costco Wholesale in the year 1999.It is currently dictating the retail warehouse segment. Costco does not advertise. Its memberships market themselves. With a customer service second to none, Berman (2011) denotes that the fulfilled customers spread the message by word of mouth which does not cost them any dome when it comes to advertising and marketing.

It offers a wide range of products hence satisfying the customers. They offer cash refunds. Costco utilizes membership model. It makes up for the highest revenue for the company. Registered members enjoy saving opportunities which influence members to spend more on shopping. The three essential things that e-commerce sites need to incorporate to ensure that their sites are top de la crème is the site design. The site should be user-friendly. The functions of each tool should be easy to select and clear, well-designed menus, filtering and sorting options which minimize the amount of time taken to locate and purchase a product. The design should be pleasing to the eye and improve a shopper’s experience. Safety is paramount. The program used offers protection from fraud and SSL Encryption-Secure Socket Layer (Allen & Fjermestad 2011, p. 14). It hence makes it possible to make payments online securely. There is enough storage space which enables consumers to shop without limitations.

IT Architecture

Websites are important in providing an interface between the establishments and the customers. A good design is essential in communicating both being rich in visual effects as well as a friendly interface. The navigation panel is not horizontal but perpendicular. This has allowed faster browsing by displaying more categories on the homepage. This has allowed shoppers not to miss out on anything when they shop online. There is also the introduction of the global navigation and footer. This has made it easier and simpler to find Costco services and pharmacy easier by placing them in the top left corner of the website.

Products have more details on the specifications tab. There is no hassle of scrolling through bulks of texts to find specifications on an item of interest. Users can compare the displayed product with their product of choice. This is enhanced by adding the items directly to the compare feature. The main images are also bigger and colorful. There is the use of quality photographs with thumbnails which zoom in when clicked. There is also the inclusion of videos and user manuals that allow users to navigate the website easily. There is the use of Search Engine Optimized. Most of the content is written in HTML format; the HTML is free of clutter, and the links are well descriptive. Users are also allowed to key in words which will help them find what they are looking for (Allen & Fjermestad 2011, p. 14).

The company has developed various mechanisms of marketing its products online. Its website is used as a marketing tool for its brands. The website is designed in the manner that attracts high traffic jam and thus, allowing many internet users to access to this website. Most of the brand products are advertised on the company’s website. Moreover, Costco Company’s website contains a forum platform that helps the company’s customer care department to have online interactions with clients (Allen & Fjermestad 2011, p. 14). The visitors to this site are allowed to ask questions, leave comments and give their views concerning the quality of products and services offered by the company (Turban, King & Viehland 2012, p. 4) Therefore, the company gets immediate feedback from the market which is important in decision making and setting up of strategic plans. It also helps the company to identify and develops new products that suit the tastes and preferences of the customers. Another marketing strategy being utilized by Costco Company is the use of social media platforms such as Facebook, Twitter, and Google.  A high percentage of the young population spent a lot of time on these social sites and therefore, the company utilizes such media platforms to reach to the segment of the population in the market and influence them to consume the company’s products (Chaffey 2011). The marketing department of Costco advertises its products on Facebook pages which can be readily available to the young generation in the market. Also, the Facebook page of the organization is utilized in engaging the online community with conversations that are aimed at promoting the products of the organization.  The packaging materials for the company’s products are also used in the marketing of these products. The containers and packaging materials contain the company’s logo on their surface. Costco logo is made up eye-catching colors which draw the attention of people. This marketing strategy helps to promote the brand name as well as the brand products of Costco (Liebermann & Stashevsky 2012, p. 292).

E-Commerce Marketing Strategies

Traditionally, the supply chain expedition involves the movement of goods from the manufacturer to the distributor. The goods are then taken to a warehouse and lastly the retailer. In such cases, many workers are involved in stocking, unloading, and loading as well as transportation (Soni 2016). However, in Costco, a lot of procedures have been eliminated for effectiveness. It buys commodities directly from the manufacturer. Interestingly, Costco works as both a wholesale warehouse as well as the retailer. It allows very few people to handle the merchandise. The goods are then channeled via a connection of cross-docking. This is whereby materials are offloaded from a truck and loaded directly to other trailers with minimum storage in between these two activities. With duration of fewer than 24 hours, the goods are stored.  Despite its high region base, Costco is at the forefront to maintain its core values and culture. Costco Wholesale has become proficient at reducing costs during supply chain. It resorts in customers saving money and the step has made Costco to outpace competitors like Wal-Mart according to Courtemanche and Carden (2011). They are focused on a business strategy. They know the desires and preferences of their customers, and they are focused on the heart of their business which is offering discounts on merchandise. Soni (2016) also denotes that its members are provided with goods that are quality in nature and at affordable prices.

Through having a small unit stock, the goods are offered at competitive rates. It allows the company to attain a higher volume of sales. The cost of labor is low due to truncated requirements of employees. Costco aims at achieving the highest quality even when offering low prices through its signature brand, Kirkland. It’s thus also enhanced via human resource training and development.

During transmission of information in E-commerce, there are many security risks that the company may experience. Costco enterprise is conscious of such security threats, and it has put in place various strategies that are used to counter these security threats. Some of the security measures for the company include physical isolation and VPN, as well as the firewall, which is used to protect the company’s network against attacks from unauthorized individuals (Pires, Stanton & Rita 2016, p. 936). Also, the organization carries out periodical troubleshooting both it internal and external networks to get all types physical isolation, maintain a high-security level of operating system, e-mail servers, and database. Since e-e-commerce is characterized by complex participants, the large volume of data and numerous financial transactions, Costco uses daily preventative measures to ensure proper running the system. Such measures include establishing network security maintenance log which helps in the recording of security related events and information for the company to identify problems in case of an emergency. Moreover, the company uses risk analysis techniques to assess the potential risks of its network system. Such strategies include risk identification, analysis, and control (Marchany & Tront 2012).

Conclusion

Costco is considered as one of the largest retail stores in the United States. It uses E-commerce system in running its operations. The success of this company in the most recent years is attributed to its effective marketing strategies and the existence of an efficient and cost effective supply chain. The-commerce services hence ensure that the gets the consumers from the manufacturer on time.

References

Allen, E, & Fjermestad, J, 2011, E-commerce marketing strategies: an integrated framework and case analysis, Logistics Information Management, 14(2), 14-23.

Berman, B, 2011, Competing in tough times: business lessons from L.L. Bean, Trader Joe’s, Costco, and other world-class retailers, Upper Saddle River, N.J., FT Press.

Beynon-davies, P., 2013, e-Business Houndmills, Basingstoke, Palgrave Macmillan.

Chaffey, D, 2011, E-business and E-commerce Management: Strategy, Implementation, and Practice. Pearson Education.

Courtemanche, C, J, & Carden, A, 2011, Competing with Costco and Sam’s Club: Club warehouse entry and grocery prices. Cambridge, Mass, National Bureau of Economic Research. https://papers.nber.org/papers/w17220

Liebermann, Y, & Stashevsky, S, 2012, Perceived risks as barriers to Internet and e-commerce usage: Qualitative Market Research, An International Journal, 5(4), pp.291-300.

Marchany, R,C, & Tront, J, 2012, E-commerce security issues, In System Sciences, 2002.

Pires, G, Stanton, J. & Rita, P, 2016, The internet, consumer empowerment and marketing strategies, European Journal of Marketing, 40(9/10), pp.936-949.

Soni, P, 2016, How Costco Manages Inventory and Supply Chain – Market Realist. [online] Marketrealist.com. Available at: https://marketrealist.com/2016/01/analyzing-costcos-inventory-supply-chain-management-strategies/ [Accessed 26 Sep. 2016].

Turban, E, King, D, Lee, J, & Viehland, D, 2012, Electronic commerce: A managerial perspective 2002. Prentice Hall: ISBN 0, 13(975285), p.4.

Zacks Investment Research, 2016, The Zacks Analyst Blog Highlights: Amazon, Costco, Wal-Mart, Target, and Alphabet. Zacks Investment Research. 2016-07.