Costco.com Product Pricing Redesign

Overview

As a long-time lover of all things Costco, I crafted a project proposal detailing a common frustration amongst members — Costco’s e-commerce website does not show members in-store warehouse items’ pricing.

My proposal details:

Project background
Timeline + Team
Budget
Key Performance Indicators
Risks

View my business case proposal slides to the right:

Costco’s e-commerce site is underutilized and requires enhancement – in an ever-growing digital age, Costco recently reported online sales dropping 10% in its third quarter ending on May 7, 2023 (Zboraj, 2023). In contrast, Costco competitor Walmart’s Sam’s Club has seen consistent e-commerce growth (Walmart Releases Q1 FY24 Earnings, 2023).

Richard Galanti, Costco CFO, noted in September 2023 that “the company hired a vice president of digital last year to spearhead a digital transformation but was still in the ‘early innings’ of a ‘two-year road map’ to improve its e-commerce website, mobile app and mobile site” (Whitman, 2023).

The company understands that to engage the Generation Z and Alpha demographics, they must redesign digital systems to become more intuitive.

Project Background

Business case analysis presentation slides

Fig. 1: Reddit.com posts from members expressing frustration of lack of online in-warehouse prices displays.

Currently, the only way users can find in-store product pricing is to enter a Costco warehouse in-person. As per company policy, “Costco doesn’t advertise or quote product pricing for our warehouse locations over the phone or online” (How Can I Find Costco Warehouse Prices?, 2023). Some members have even created third-party websites where they track in-store prices in an attempt to circumvent this issue. However, this is time-consuming and directs members off the Costco.com website. As seen in Figure 1, this is a common frustration customers vent about online.

Costco has attempted to address this problem by offering same-day delivery via Instacart to members. The Instacart addition only creates more product pricing confusion for users, as Instacart “prices are marked up higher than your local warehouse” and may be a few dollars more or less than Costco.com’s official product markings (Same-Day Delivery Powered by Instacart FAQs, 2024). Members feel frustrated going back and forth between two different websites (Costco.com and Instacart), lacking a seamless user experience.

The Costco.com Product Pricing Redesign project will:

Enhance Costco’s reputation and relationship with members

Promote a transparent, user-friendly digital experience

Improve Costco’s e-commerce performance

Project Timeline

June 1, 2024 to August 15, 2024, with milestones including:

June 8: Project planning complete
June 18: User research complete
June 30: Data collection of Costco product prices for all U.S. locations complete
July 5: Design system and product page redesigns complete
July 20: Minimum Viable Product (MVP) complete
August 1: Usability testing complete
August 15: Prototype complete

Project Team

1 project manager, 2 developers, 1 designer, and 1 researcher from Costco IT. Members will work cross-functionally, but in their roles will:

Project Manager: Organize and plan project by delegating tasks and ensure the project meets Costco’s mission and requirements by communicating with stakeholders
Developers: Utilize technologies to build backend and frontend product page redesigns for functional prototype
Designer: Take user research insights to create customer-facing product pages that are intuitive and solve customer pain points
Researcher: Conduct user research during beginning and end stages of the project to ensure end deliverable is beneficial and bug-free

Fig. 2: Brief project deliverable timeline

Budget

This project requires a $50,000 budget to be allocated to:

Personnel (from Costco IT):

Project Manager $8,000
2 developers, 1 designer, 1 researcher: $19,000 (4,750 each)

Materials & Technology

Technology equipment, tools, and software licenses: $10,000 – Necessary for technology such as computers, monitors, subscriptions, or other tools the team needs.
Technology training: $1,000 – Expenses for any training the team will need to develop necessary skills or certifications that will make them well-equipped to complete the project.

Consulting

External digital consultant: $8,000 – Funds necessary for a third-party consultant well-versed in redesign projects to assist in directing the team.

Research

User research methods for product testing: $2,000 – Funds necessary to conduct research and tests, such as deploying surveys or incentives for interviewees.

Contingency Fund:

$2,000 – Funds for unforeseen circumstances

Key Performance Indicators

Project success will be measured by e-commerce profits and member satisfaction, as seen in Figure 3:

Increase Costco e-commerce sales by 20% by the end of 2025
Increase Costco Customer Satisfaction score by 10% by the end of 2025
Achieve a 15% increase in Costco.com traffic by Q2 of 2025
100% of project milestones completed by August 15, 2024

Fig. 3: Schedule of when stakeholders will see project benefits

Why this project is necesary

Costco has failed to adapt to the pressing need for an intuitive online retail space. While the company has recently realized this failure, no concrete steps have been laid out…

The Costco.com Product Pricing Redesign contains actionable steps to address a popular Costco member frustration with a proposed 2025 revenue increase, visualized with data from Statista. The three-month project will result in an easy win that, if utilized, will:

Quickly develop brand loyalty
Increase e-commerce traffic
Showcase Costco’s commitment to digital transformation

Risk Analysis

This project utilizes the skills of current internal Costco IT employees, but there is no guarantee available Costco employees with the skills necessary for project success will be available. This risk will be mitigated by:

Assessing the current Costco IT team and their roles
Offering a competitive bonus for employees willing to support the project
Allocating funds for training — if a certain skill cannot be obtained, the budget allocates funding for an external consultant who can fill project gaps.