Clothing, Home and Toys
By Evan Colegrove
When exploring the data gathered by our team from different departments, I came to the conclusion that Costco is able to effectively compete with Amazon due to their pricing structure and selectivity in items they sell. This is shown in a few different ways, starting with pricing.
In the Clothing department, Amazon and Costco are very similar in pricing, though Amazon typically has more styles and sizes for their garments available. However, on an individual item by item basis, Costco has many items available at a steep discount from the Amazon pricing, though due to the nature of clothing, this doesn’t offer anything conclusive, as clothing is a type of merchandise that is continuously changing in price and availability as trends come and go and inventory changes. Many of the clothing items we originally gathered from Costco are no longer listed, leading me to believe that they had limited inventory of these items to begin with and were selling them at lower prices to liquidate the inventory. However, if we take a look at the Home & Kitchen department, this changes. When comparing overall prices of the items we listed, Amazon again comes out on top slightly, with an average price of $165.86 to Costco’s $178.53. However, when viewing individual items again, Costco has items listed at significantly cheaper prices (For example, a particular sewing machine, coffee machine, and water cooler are all nearly 25% cheaper on Costco than on Amazon. The average price is tipped back into Amazon’s favor by the multitude of smaller items that are slightly cheaper on Amazon, by 5-10%. In the end, it would appear that Costco tends to offer better prices on appliances, especially commercial ones, while Amazon offers better prices on other kitchen and home needs, such as cutlery, tools, and bedding. When looking at the toy and baby departments, it is clear that Costco does not attempt to compete in this department with Amazon, as there were only a few items available on Costco’s website that were also available via Amazon. Among those items that are available however, Costco offers significantly lower prices across the board, with an average price of ~15% lower than the same items on Amazon. With how limited the inventory is though, it is clear that much like the Clothing department Costco seems to only carry select items that they can move quickly and turn a profit on despite their lower pricing.
Other than pricing, there are a few other data points that are somewhat important when comparing these two retailers. Customer reviews in these three departments all tend to be higher from Costco customers, by an average of ~½ a star. At first glance, it would appear that Costco customers are more satisfied with their purchases of the same items than Amazon customers, though it is important to note that the number of reviews is typically significantly higher on Amazon. Most items on Amazon have roughly double the number of reviews, giving higher likelihood of an unsatisfied customer overall. Even given that discrepancy however, it is still interesting to see that the average review for the same items when purchased from Costco is noticeably higher. A few speculations could be made on this: Perhaps Costco customers feel that their purchases were better than Amazon customers because they believe they payed less, (even if that difference is insignificant, or untrue) or Costco customers simply believe that they are always getting the better deal because of their loyalty to Costco and their membership.