Costco, the renowned members-only warehouse retailer, has embarked on a unique venture, offering 1-ounce gold bars exclusively through its online platform, a move lauded by analysts as both innovative and lucrative. Introduced last year, this initiative has proven to be a remarkable success, with recent reports indicating a substantial influx of revenue for the company.
According to a research equity note by analysts at Wells Fargo, since the inception of the exclusive online sales of gold bars in 2023, Costco has been raking in an estimated $200 million each month. This significant financial boost underscores the popularity and viability of the venture.
Market analysts suggest that the introduction of gold sales has also had a positive impact on Costco’s overall performance, with same-store sales experiencing a noticeable uptick of approximately 1%. Notably, the demand for the 24-karat gold bars has surpassed that of other popular Costco items, such as discounted laundry detergent.
During an earnings call, Costco’s CFO, Richard Galanti, revealed that the gold bars often sell out within hours of being listed on the company’s website, highlighting the immense appeal among members. Initially, a purchase limit of two bars per member was enforced, with each bar priced just under $2,000.
In a strategic move, Costco has closely monitored customer feedback, including insights from platforms like Reddit, to gauge the reception to its precious metal sales. Despite pricing the gold bars competitively at around 2% above the spot price, Costco has limited transactions to one per member, a policy aimed at maintaining fairness and accessibility. However, within a single transaction, members are permitted to purchase up to five bars.
In an unconventional stance, Costco has stated on its website that purchases of gold bars are non-refundable, further emphasizing the company’s commitment to this venture. Analysts at Wells Fargo have commended Costco’s decision to delve into precious metal sales, hailing it as a strategic move that reinforces the company’s value proposition. Additionally, jewelry, another high-performing sector for the retailer, has further solidified Costco’s position as an industry leader.