Costco uses a different rule book than other retailers.
It doesn’t have to be the flashiest, look the fanciest, or sit on the cutting edge of technology. The warehouse club simply needs to keep its members happy.
“Costco’s membership fees contributed some 72% to its operating income last year,” according to Retail Dive.
It’s a business model where success is measured by holding on to members, which the retailer has done very well.
“In the third quarter, the warehouse club reported membership fee income of $1.373 billion, an increase of $133 million or 10.7% year over year. Adjusting for FX, the increase was 9.9%, according to CFO Gary Millerchip, speaking during the company’s third-quarter earnings call.
Costco’s monthly sales aren’t the only barometer of success because membership retention is central to the business model. Still, growing sales show that members are actually using their memberships, and that has actually changed in a meaningful way.
The warehouse club, which does not spend the billions that rivals such as Amazon and Walmart invest in digital sales, has still managed to show massive growth in that area.
Costco’s sales numbers show digital growth
Costco Wholesale Corporation reported net sales of $23.7 billion for the month of August, the four weeks ended Aug. 30, 2026, an increase of 9.9% from $21.56 billion last year.
For the 16-week fourth quarter, Costco reported net sales of $93.9 billion, up 11.3% from $84.4 billion last year. And for the 52-week fiscal year ended Aug. 30, 2026, the warehouse club reported net sales of $297.3 billion, an increase of 10.2% from $269.9 billion last year.
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That, however, wasn’t the most exciting number for the warehouse club.
Costco also reported digital sales growth of 17.9% for August, 19.8% in the fourth quarter, and 20.7% for the full year.
Those numbers show that Costco’s efforts to grow its digital business through clever partnerships, like its deal with Instacart and the recently shuttered Costco Next third-party marketplace, drove sales.
Costco may not be taking sales from Amazon and Walmart, but the strong renewal numbers suggest Costco’s digital shortcomings haven’t become a meaningful reason for members to leave.
That’s backed by its member retention rates.
“In terms of renewal rates, at Q3 end, our US and Canada renewal rate was 92.2%. Up 10 basis points from last quarter. And the worldwide rate came in at 89.7%, unchanged from last quarter,” CFO Gary Millerchip said during the company’s third-quarter earnings call.
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Costco has focused on smart tech investment
When Ron Vachris took over as Costco’s CEO in January of 2024, he made digital sales a priority, but he was not looking to duplicate the infrastructure required by Amazon and Walmart. Instead, he tried to leverage what the company was already doing.
“Our biggest strength on digital e-com is, of course, the merchandise and the value that we have. I mean that’s what works for us in our brick-and-mortar,” he said during the chain’s third-quarter 2024 earnings call.
He believed the chain could grow digital sales by focusing on the basics.
“A lot of the work that’s being done right now is very foundational. So better fulfillment, quicker delivery times, the reliability of the site, those types of things,” he added. “And then following that will come iterative changes of forward-facing improvements that you’ll see in the sites and move forward.”
It was a simple, cash-light strategy that, based on the recent numbers, has worked in driving significant increases in digital sales.
Vachris, during the Q3 call, talked about how its delivery business has improved.
“Average same-day delivery time in the U.S. is now less than 45 minutes, and the average member satisfaction rating is 4.8 out of 5. This part of our business is growing at an even faster rate than our digital business overall,” he said.
Costco is careful with its tech investments
RTM Nexus CEO Dominick Miserandino told TheStreet that Costco has a very simple motive with its tech investments.
“Costco isn’t digitizing for buzz. Its digital and in-store tech is translating directly to faster service and stronger member engagement,” he shared.
When Vachris assumed the CEO job, he talked about improving the company’s digital operations and GlobalData Managing Director Neil Saunders thought he had the right approach.
“I don’t see this as a radical reinvention of Costco. It’s simply that the new CEO thinks there is an opportunity to use technology better. In my view, he is correct in his assessment. Costco can improve in areas like collect from store, checking what’s in stock at the warehouse, and making the ecommerce process easier,” he wrote on RetailWire.
He noted that the chain will continue to be careful in its tech spending and not attempt to match Amazon, Walmart, or any other chain.
“This will all be selective: Costco isn’t going to offer every item for collection because some of its bulky products just don’t lend themselves to that kind of service, and most customers love visiting the warehouse. So, I’d say this is all more of a gentle technology evolution than a massive transformation,” he added.
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