Why Costco Could Be a Loser in the E-Commerce Boom

For years, Costco (NASDAQ: COST) has traded at a premium to the rest of the retail sector.

The warehouse giant has avoided many of the challenges plaguing its brick-and-mortar peers as the company's membership model provides a locked-in customer base and reliable cash flow that goes straight to the bottom line. At the same time, its reputation for bulk goods at rock-bottom prices continues to bring in customer in droves, and it consistently racks up strong same-store sales growth. No other warehouse chain has come close to the level of sales that Costco does, which has given it a competitive advantage in the subsector.

However, the pandemic has brought about rapid change in the retail sector. In addition to the bifurcation between non-essential and essential retailers, and pressure in categories like apparel, e-commerce has boomed as shoppers who have been sheltering in place or are simply reluctant to visit a store are now shopping online.

Source Fool.com