Tuesday, May 6, 2014

What do Costco Buyers Want? The 3 Key Must Haves of a Successful Costco Product!

Is your product too big, too small, too short or too tall?  Is it too expensive, too cheap, too old or too new?   What exactly are Costco buyers looking for in the next big product?

If there was one exact formula that answered this question, one that would guarantee success, you can bet I would package and sell it all day long.  If we could simply say, “do these things and you will get in” you can rest assured I would be shouting it from the rooftops.  The real answer, the honest answer is that there is no exact formula, no magic bullet that will guarantee your immediate success when it comes to one of the worlds biggest and best run retailers.  Every day 1000s of products are rejected while only a select few make it past the front door and over the years I have noticed that those select few have a couple things in common.

Below are, what I believe to be, 3 key aspects that can help any products chances of success at Costco.  If all three of these aspects exist in one product, they have a much better chance of gaining the interest of buyers and a possible test.

  1. Flexibility – With just fewer than 4000 skus in any one Costco (compared to over 45,000, in some of it’s competitors) the company does not have the ability to service extremely segmented niche markets.  Could every member walking through the doors of a Costco purchase your product?  Not that every member would, but could they?  Before you answer yes, consider this example.  If the product were an Electric Food Composter that could compost kitchen food scraps in just a couple hours, this would be interesting to Costco, as every family in Costco will have food scraps.  Not that all families would buy this product, but they all could, as food scraps is the common thread.  Contrast this with a Beer Pong Table.  Let’s forget for a moment that Costco would probably not sell a game that promotes heavy drinking and instead look at the very segmented population this would appeal to.  Because this item would primarily appeal to college students it would not generate enough revenue to pay for the space it takes up.
  2. Product Value – Product value can be a deceiving factor when vendors are bringing products to Costco or any club store.  As value to the member is the driving force behind the success of Costco, vendors often believe that offering a better deal on their product is just what Costco is after, however they would be only partially correct.  Costco does want to offer a value to the millions of members who pay an annual fee to shop there, however value is only partially shown in price.  If not price, then what you ask?  The other half of the value proposition is comparison.  Costco wants it’s members to have the pleasant shopping experience of buying a product at Costco that they have seen at a different retailer for more.  Let me give you an example:  While in the market for a new printer I had narrowed my search to a specific HP Photo ink jet unit.  This particular printer sold at Office Depot for $179.99, which I thought was a good deal and almost purchased it on the spot.  Later that week I came across the exact same printer at Costco for $149 that also included a set of full size ink cartridges.  I was delighted and thus had no issue renewing my membership that year as the savings on that one purchase more that covered my membership.  Now, contrast that experience with the following hypothetical scenario.  I am in the market for the same printer and come across a printer at Costco I am not familiar with.  The price seems good, but I have nothing concrete to compare it to.  The value proposition to the member is there, however it is much less tangible and does not create the same emotional response as knowing I received a great value. 
  3. Uniqueness –In order to get placement in Costco and be part of an exclusive 4000 sku assortment your product must have a uniqueness that can be quantified.  In today’s competitive market   it is not enough to say your product is cool or different, you must be able to speak to why it is different and how it’s differences make it attractive.  Remember, Costco doesn’t have a hard time finding products to sell, so if you are going to go after them you had better be loaded with why they should consider your product, why the category is trending and what puts your product at the top of it’s category today.


The right product at the right time with the right preparation can have a shot at getting into Costco or any other large retailer irrespective of how big or small the vendor is.  The above is simply my opinion on ways to improve your odds of success. 

For more information, tips or to contact me, visit my website at www.tlbconsulting.com.

Happy Selling.