Costco’s e-commerce sales rose 28.5% in Q2, according to earnings released on Wednesday. CFO Richard Gilanti attributed some of this success to an improved email strategy. Indeed, from 2016 to 2017, the retailer increased email volume by 70%, according to L2 research.
While the retailer still sends far fewer emails than behemoth Amazon (approximately 4.9 million in 2017, compared to Amazon’s 18.7 million), this is a sign that Costco finally recognizes the importance of digital investments in today’s retail environment. Given the brand’s Average ranking in L2’s Digital IQ Index: Big Box, it clearly has some catching up to do.
In addition to increasing the volume of email campaigns, Costco announced that it has been attempting to improve the content of emails being sent out. Costco places particular emphasis on sending out emails surrounding their “Hot Buys” offerings; in its earnings release, the brand noted that these emails drive excitement and traffic both online and in-store. However, L2 analysis reveals that the effects of “Hot Buys” emails have yet to be proven, as they have the same average open rate (17.6%) as the rest of Costco’s campaigns.
While email content hasn’t yet yielded many returns for Costco, other improvements seem to be paying off. The retailer’s site traffic from emails increased by 10% year-on-year in Q4 of 2017. If Costco wants to build on its momentum and compete with the digital leaders, the next step will be to improve email segmentation.