E-commerce sales through Costco.com grew 14.8% in Q3 YoY, on top of 20.7% growth in 2023, and it turns out that much of that growth can be attributed to the company's online gold sales.
Analysts estimate that Costco sells over $200M a month in gold, which hit a record high of more than $3,600 per ounce on Wednesday. Although precious metal sales have thin margins, they do wonders at boosting Costco's bottom line e-commerce revenue growth.
Costco didn't share exact sales figures for gold on its Q3 earnings call, but former CFO Richard Galanti has previously said that the supply usually sells out “within hours” of its release, especially when its spot price rises faster than the retail price.
Costco's super low markup on gold is a big appeal for first-time gold buyers who trust the product they're receiving since it comes from Costco versus a shady pawn shop or local gold dealer, and the appeal is helping to drive hundreds of millions of dollars in sales through its website, allowing Costco to show strong e-commerce growth with relatively low risk or long-term capital investment.
The buzz around its gold and silver are also helping to attract new membership sign-ups, since the precious metals are member exclusives.
A pretty brilliant strategy Costco! Is Target going to copy it? Next week we'll read a press release from Target, “Well, we can't afford gold right now, but, introducing Sterling Silver Bars!”