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Why Costco Wholesale Should Not Be Afraid Of Amazon?

|Includes: Costco Wholesale Corporation (COST)

The traditional brick and mortar store should not fear the rising competitive threats imposed by online retailers.

Amazon and Costco Wholesale are the powerhouses of their own industries. The former is the e-commerce giant company whereas the latter is the largest provider of wholesale items and products. The latter is known as the 'beacon of light' in the tough times where the warehouse club store and its membership models assisted the company to be known as one of the most dominant forces in its market. However, the success of the warehouse stores club might be on the risk, considering the rising trend of online retail stores, such as Amazon.

It is known that a traditional brick and mortal retailer, Costco, has been facing competitive threats for quite a long time and dealing with them is an ongoing process. Many analysts believe that online e-commerce retailers, such as Amazon, are not as much of a big threat and it should not fear such competition. Costco Wholesale is the preferred option of shoppers because of many reasons. The shoppers of the warehouse club or anywhere prefer tactual shopping experience to virtual shopping experience.

It is well known that such companies can easily be a threat to 'wholesale provider' with their unlimited launching of new services every now and then, but the brick and mortar store provides the proper marketplace environment to the consumers. For consumers, who are loyal to the company, knows the value of the store, hence they believe that online alternative can never replace what Costco offers. Therefore, an online retailer cannot be considered as a major threat to it.

Furthermore, the company is currently focused on a single mission and it seeks to achieve it eventually. Despite of the fact that the wholesaler does not have many businesses or more product categories when compared to the likes of Amazon, it is only determined to offer its 'member-customers' the best deals, discounts, and bargains. Sources report, "Costco has no such conflicts, and that makes it far easier for the retailer to satisfy its shoppers by making them feel like they're the most important part of the retailer's overall success." In addition, the wholesale store wants to make deals with the suppliers at lower prices.

The big 'plus' is that this 'wholesaler' does not spend heavily on marketing, as well as it is not dependent on marketing to generate significant results. The company saves from that huge budget expenditure on marketing by other companies in order to push people on their websites. Costco Wholesale is performing well in the market and it has nothing to worry about against the competition threat imposed by e-commerce retailers.