Will Costco Get Amazoned?

Aug 30, 2017
J. Webster
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The majority of the articles being written about Costco the past few days say the stock is a buy.

The headlines say that Costco’s stock has been too beaten up with all the talk of Amazon encroaching on it’s turf. There’s also talk over at Bloomberg that tons of Amazon Prime members are also Costco members, as though a choice between the two has to be made. And what with Amazon buying Whole Foods and then cutting prices, Costco stock was was knocked down once again. The articles are saying Costco stock is on sale. But will Costco get “disrupted” by Amazon over the long run?

You’d have to say though that not everything will get Amazoned, become a “showroom” for Amazon or just get undercut as everyone starts to buy more online. People still like to shop, especially at Costco with new in store deals or their samples or just the social aspect of shopping.

What Costco stores will have to do is streamline things further, higher more workers to reduce line along with offering the ability to order certain purchases ahead of time or offer online shopping and pickup entirely – you could buy all your main items online and then go to Costco to hunt for a few “treasures” in the store. Parking at stores will have to improve though, seems silly, but if it becomes just too much work to drive to Costco and park, the store might start to get Amazoned over time.

The question is though, as with anytime you buy a stock is at what price is right. How low does it have to go before it’s a buy? Costco doesn’t really have much of a dividend, so it’s hard to gauge the bottom of the stock. And then you look back and see how low it was during the Great Recession…it’s wise to be happy if the stock goes lower and you can buy more.

But, in the chase to keep up with Amazon and Walmart, is there a company that Costco might end up buying….? Walmart bought Jet…who could Costco buy….Amazon bought Whole Foods…who could Costco buy..that might be a stock that gets a lot of attention as retail stores fight it out.

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