Amazon Vs. Costco In 2023: A Seller‘s Perspective on Returns, Customer Service and More
As an experienced Amazon seller, I‘m often asked how Amazon compares to Costco – especially when it comes to important factors like returns, pricing, and customer service. With over 175 million Prime members as of 2022, Amazon dominates the ecommerce landscape. However, Costco remains popular for brick-and-mortar bulk shopping.
In this 2800+ word guide, I‘ll compare the Amazon and Costco experiences from a seller‘s perspective. You‘ll learn how the two models align for buyers, where they differ, and get actionable tips for both retailers. Let‘s dive in!
Introduction: How Do Amazon and Costco Stack Up?
Amazon is the clear ecommerce leader, but Costco persists as a beloved bulk shopping destination. As a seller, I leverage Amazon‘s massive reach but also see the value Costco provides consumers.
Some key stats on Amazon:
Captures 41.4% of the US ecommerce market as of 2021, nearly 5x higher than the next competitor Walmart [1].
Over 200 million Prime subscribers globally as of September 2022 [2].
Amazon Prime members spend an average of $1400 annually compared to $600 for non-Prime shoppers [3].
Meanwhile, Costco remains a staple for many households:
605 warehouse locations globally and growing. Opened 30+ new locations in 2022 [4].
Roughly 111 million cardholders as of Q4 2022, with membership renewals over 90% [5].
High average transaction size, often $144 per U.S. shopping trip [6].
Both retailers offer key advantages for sellers and buyers alike. In this guide, I‘ll use my expertise selling over $5 million on Amazon to compare:
- Product range and private label branding
- Membership program benefits
- Shipping and delivery options
- Return policies and customer service experience
- Pricing and overall value for money
- And much more!
Let‘s explore how Amazon and Costco align for consumers in 2023, where they differ, and how sellers can succeed on both platforms.
Costco‘s Warehouse Model Offers Bulk Sizes and savings
Costco pioneered the membership warehouse model starting in 1983. For an annual membership fee, shoppers gain access to discounted bulk pricing on grocery, household essentials, appliances, clothing, and more.
Costco is perfect for stocking up on items used regularly. Benefits include:
Kirkland Signature brand – High quality, low-cost private label products comparable to national brands. Provides average savings of 30% over name brands.
Bulk quantities – Larger pack sizes on items like paper towels, detergent pods, snacks, canned goods, and beverages offer increased value per unit.
Pharmacy – Low prescription drug prices thanks to negotiated discounts and high-volume sales.
Gasoline – Significant per-gallon savings available at Costco gas stations for members. Average of $0.30 discount vs. other stations.
Optical, photo printing, food courts – added services improve convenience.
As a seller, I regularly stock up on essentials for my household and business at Costco locations. The savings from bulk Kirkland purchases comfortably offset the $60 Gold Star membership fee.
Amazon‘s Ever-Expanding Online Product Selection
One of Amazon‘s greatest strengths is their expansive product catalog – over 350 million SKUs and growing! This allows customers to buy nearly anything they want or need through one retailer.
Some key categories include:
Amazon Devices – Echo, Fire Tablets, Kindle, Ring security equipment
Amazon Fresh groceries – Fruits, vegetables, pantry items, household essentials available for fast delivery
AmazonBasics – Quality generic items like batteries, HDMI cables, furniture, small appliances, etc. Comparable to Costco‘s Kirkland brand.
Clothing & Shoes – Wide range of apparel, accessories, and footwear
Beauty & Health – Makeup, skincare, hair care, vitamins, medicines, and more
Alexa Skills – Voice apps that expand Alexa‘s capabilities
Amazon allows sellers like myself to easily list products across all these categories and leverage their world-class logistics. I can focus on sourcing great products while Amazon handles fulfillment and customer service on my behalf.
The extensive selection also makes Amazon a go-to for comparison shopping. I will often price check Costco bulk buys against Amazon listings while shopping.
Amazon Prime Perks vs. Costco Memberships
Now, let‘s compare the paid membership programs at each retailer.
Costco Membership Options
Costco offers two membership tiers:
Gold Star: $60/year – Basic warehouse access for individuals and households. Add household cardholders for free.
Executive: $120/year – Upgraded 2% annual rewards on Costco purchases, plus other benefits.
Executive members earning 2% back on over $3000 in annual purchases effectively offset the higher $120 fee. For frequent Costco shoppers, this tier is a no-brainer.
Amazon Prime Advantages
An Amazon Prime membership costs $139/year. Key perks include:
Free 1-2 day shipping – no minimums on millions of Prime-eligible products.
Prime Video – access to movies, TV shows, Amazon originals, live sports and more
Prime Music – over 2 million ad-free songs available to stream
Prime Gaming – free games, in-game loot, and a free Twitch channel subscription each month
Prime Reading – rotating selection of free ebooks and magazines
Unlimited photo storage – free secure cloud backup for all your photos
Whole Foods discounts – 5-10% off many items plus extra deals for Prime members
For frequent Amazon shoppers buying more than 2-3 Prime-eligible items per month, the $139 annual fee is easily justified through the free shipping alone. The media benefits like Prime Video are just the icing on the cake.
Costco vs. Amazon: Delivery and Pickup Options
Convenience is a major factor for shoppers today. How do delivery speeds and flexibility compare?
Costco
Free 2-day shipping – on orders over $75 at Costco.com
Same-day delivery – via Instacart for warehouse purchases. Fees apply.
Curbside pickup – buy online and retrieve at select warehouse locations
Costco Grocery – 2-day and same-day grocery delivery in certain areas
Amazon
Free 1-2 day shipping – 80%+ of Prime items qualify
Free same-day delivery – millions of items in select areas
Amazon Fresh – fast grocery delivery including produce and dairy
Counter pickup – secure self-service locations for order retrieval
Whole Foods 2-hour delivery – from store to door in select cities
Amazon sets the benchmark for shipping speed and flexibility. But Costco‘s same-day via Instacart and added Curbside pickup options help it stay competitive.
As a seller, I rely on Amazon‘s fulfillment and delivery capabilities to satisfy Prime members. Costco‘s warehouses serve a smaller geographic radius.
Costco vs. Amazon: Return Policies and Customer Service
Shopper confidence comes from great customer service and lenient return acceptance. How do the policies compare?
Costco Return Policy
90-day return window from date of purchase
Accepts returns on most products, including electronics and major appliances
Can return at any warehouse location
Refund to original payment method
Amazon Return Policy
30 day return window from delivery date
Stricter limits on digital purchases and Amazon Devices
Print free prepaid label for returns by mail
Refund to original payment or Amazon credit
Costco clearly edges out Amazon on returns by offering a 90-day window with in-store refunds. However, Amazon makes returning by mail risk-free by providing prepaid labels.
I deal with more returns selling on Amazon since customers don‘t see products in person first. However, the volume of sales outweighs any losses from refunds.
For customer service, Amazon offers 24/7 phone and chat support. Costco provides help desks at each warehouse location during business hours. Both retailers aim to quickly resolve issues.
Amazon vs. Costco Pricing: Who Offers Better Deals?
Pricing and overall value are where buyers see the biggest differences between the two retailers.
Costco‘s Bulk Pricing Saves Big
Warehouse quantities on Kirkland and national brands beat Amazon on unit pricing for staple goods.
You‘ll find far lower per-unit costs on items like these:
- Paper towels
- Toilet paper
- Batteries
- OTC medications
- Snacks and candy
- Cleaning supplies
- Beverages
Shoppers willing to buy bigger sizes can save 20% or more compared to Amazon.
Amazon Dynamics Favor Specialty Goods
Amazon uses complex algorithms to adjust pricing frequently. While rates are competitive on household basics, Amazon excels on long-tail items.
You‘ll often find better prices on:
- Electronics
- Kitchen appliances
- Outdoor equipment
- Pet supplies
- Beauty products
- Specialty cooking ingredients
Amazon‘s massive selection allows easy price comparisons to find deals.
Expanded Private Label Offerings
In addition to the core AmazonBasics line, Amazon has over 170 private label brands as of 2021 [7]. These include names like:
- Solimo (household & personal care)
- Goodthreads (clothing)
- Stone & Beam (furniture)
- Rivet (home furnishings)
- Amazon Elements (vitamins & supplements)
Expanding private labels helps Amazon compete with Costco‘s Kirkland brand. But it also poses risks if taken too far. Reliance on self-owned brands could stifle competition.
Amazon Selling Tips and Strategies
Now, I‘ll share insider tips from my experience successfully selling over $5 million on Amazon. These details will help other sellers maximize sales and manage their business.
Choose the Right Seller Model
Sellers have two fulfillment options on Amazon:
Fulfilled by Merchant (FBM) – you handle storage, packing, and shipping yourself
Fulfilled by Amazon (FBA) – Amazon stores inventory and handles delivery
FBA costs more but is preferred since it:
Makes items Prime eligible for free 2-day shipping
Lets Amazon handle customer service and returns
Qualifies sellers for Prime badges that increase conversion
Focus on Listing Optimization
Just getting a product listed isn‘t enough. You need to win the Amazon Buy Box. This refers to the "Add to Cart" button on a product page. To increase your odds:
- Price competitively using repricers
- Maintain high seller performance metrics
- Drive positive reviews
- Optimize titles, bullets, and descriptions
Run Promotions Strategically
Limited-time discounts and coupons incentivize buyers:
- Set up Lightning Deals for flash sales
- Offer coupon codes on social media and email
- Coordinate promotions across top sellers on a listing
A/B test different tactics to see what delivers the best results.
Analyze Key Seller Metrics
Tools like Seller Central, Jungle Scout, and Helium 10 provide critical data:
Review detailed analytics on traffic, conversions, profits and more
Monitor key performance indicators (KPIs) like rating, cancellations and defects
Identify top performing categories and listings
Stay on top of inventory levels and forecasting
Use data-driven insights to make smart decisions and fuel growth!
Don‘t Be Overly Reliant on Amazon
As indispensable as Amazon is, smart sellers focus on:
Diversifying across other sales channels (eShop, retailers, own site)
Building an email list and social following to engage customers
Creating brand recognition not dependent on Amazon
Avoid "putting all your eggs in one basket" and leverage other opportunities!
Final Thoughts – Who Wins on Value Overall?
So who comes out ahead – Amazon or Costco? For most US households, having both a Prime and Costco membership makes the best sense.
Shop Costco for superior bulk pricing on household staples and grocery essentials. The Kirkland brand provides quality generics at even deeper discounts.
Use Amazon for hard-to-find items, specialty purchases, and convenience of delivery. Price check Amazon on electronics, toys, apparel, and small appliances.
Together, the two memberships offset their annual costs through valuable perks, discounts, rewards and free shipping. Costco for volume savings, Amazon for selection and speed!
As a seller, I leverage Amazon‘s platform and Prime members while shopping Costco for my own business and personal needs. This combination provides the best of both worlds.
I hope this insider‘s guide helps you make informed shopping choices and maximize savings in 2023! Let me know if you have any other questions.