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Costco Bets on AI for Online Sales Growth
6 Jul
Summary
- Costco sees triple-digit growth in AI-sourced e-commerce traffic.
- AI helps Costco highlight product value, including delivery and installation.
- Starbucks recently halted its AI inventory system due to inaccuracies.
Costco has embraced artificial intelligence, particularly for its e-commerce operations, marking a shift from its traditional cautious approach to new technologies. The company reported significant triple-digit growth in traffic sourced through AI on its website, with AI-driven traffic demonstrating a high conversion rate.
CEO Ron Vachris explained that Costco is partnering with leading AI firms to better showcase its value to current and potential members. The retailer believes AI is transforming how consumers research products and presents a substantial opportunity, leveraging Costco's pricing authority and focus on quality.
A practical application involves enhancing online product pages, especially for items like appliances where AI helps convey the full value, including delivery, installation, and haulaway services, which traditional search methods did not fully highlight.
This strategic adoption of AI by Costco contrasts with missteps by some rivals. Starbucks, for example, recently discontinued its AI inventory management tool after less than a year due to its inability to accurately distinguish between various milk types, opting to revert to human inventory management.
