Posted October 12, 2007 7:08 pm by with 3 comments

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Internet Retailer.com reports that Costco Wholesale has reached a billion in online sales. This year their online sales grew by about 39% to $1.22 billion. Last year they were at $880 million. They reported net income of $1.08 billion on revenue of $64.4 billion for the 2007 fiscal year. Overall the web accounted for about 2% of total sales.

What is working for the retailer? They credit ongoing marketing strategies implemented since 2005. That includes marketing to Costco club members via e-mail, direct mail, a monthly magazine, as well as in-store programs, flyers, and kiosks.

Other ways they have grown this channel include navigation, on-site search, and enhancing images. They enhanced site navigation to be easier to use and added a more sophisticated search engine. And they improved their images. As an online marketer, I love that they are giving us their conversion rate – 1.31% with an average sale of $400. They get 8.5 million visits and 6 million unique visitors every month.

While it’s disconcerting to think that conversion rates online hover between 1-3% it still shows that even at that level, it can be quite profitable.