Costco CEO's Famous Last Words on Grocery Delivery

A blog about business and economics.
June 6 2013 9:05 AM

Costco CEO Says Nobody Can Figure Out How to Do Same-Day Grocery Delivery Profitably

Shopping carts are collected outside a Costco store in Alhambra, Calif., on June 2, 2013.
Shopping carts are collected outside a Costco store in Alhambra, Calif., on June 2, 2013.

Photo by Frederic J. Brown/AFP/Getty Images

Brad Stone has a great profile in Business Week of Costco and its CEO, Craig Jelinek, focused on his high-road approach to employee compensation and morale in contrast to the ruthless cost-cutting at other major retailers. But I think Mina Kimes was right to pull out this little ditty on grocery delivery as particularly interesting:

Since much of Costco’s growth is concentrated in food, it could be particularly vulnerable if Amazon ever cracks the grocery delivery business. (Amazon has been testing such a service, AmazonFresh, in Seattle since 2007, and is reportedly set to expand nationally in the next few months.) Jelinek says Costco has studied online grocery delivery but can’t figure out how anyone can do it profitably.

Without further context that reads like a prediction that AmazonFresh will fail. But loyal Moneybox readers will recognize this as a sign that Costco might really be doomed. Amazon is a retail juggernaut built on the principle of not doing things profitably. If the big problem with online grocery delivery is that it can't be done profitably, then Amazon is the ideal company to dominate the space. It would essentially be a roundabout way of financing the purchase of a lot of delivery vehicles in order to build out a larger delivery infrastructure. What I don't know is how Google's rival Google Shopping Express service will fit into this landscape.

But make no mistake: Any CEO who's out there comforting himself with the thought that he's already considered what Amazon is talking about and already determined that it's impossible to make money that way is living in a dream world. They don't care. That's why they're terrifying.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.



Don’t Worry, Obama Isn’t Sending U.S. Troops to Fight ISIS

But the next president might. 

IOS 8 Comes Out Today. Do Not Put It on Your iPhone 4S.

Why Greenland’s “Dark Snow” Should Worry You

How Much Should You Loathe NFL Commissioner Roger Goodell?

Here are the facts.

Three Talented Actresses in Three Terrible New Shows


The Human Need to Find Connections in Everything

It’s the source of creativity and delusions. It can harm us more than it helps us.


More Than Scottish Pride

Scotland’s referendum isn’t about nationalism. It’s about a system that failed, and a new generation looking to take a chance on itself. 

The Ungodly Horror of Having a Bug Crawl Into Your Ear and Scratch Away at Your Eardrum

We Could Fix Climate Change for Free. Now There’s Just One Thing Holding Us Back.

  News & Politics
Sept. 17 2014 7:03 PM Once Again, a Climate Policy Hearing Descends Into Absurdity
Business Insider
Sept. 17 2014 1:36 PM Nate Silver Versus Princeton Professor: Who Has the Right Models?
Sept. 17 2014 6:53 PM LGBTQ Luminaries Honored With MacArthur “Genius” Fellowships
  Double X
The XX Factor
Sept. 17 2014 6:14 PM Today in Gender Gaps: Biking
  Slate Plus
Slate Fare
Sept. 17 2014 9:37 AM Is Slate Too Liberal?  A members-only open thread.
Brow Beat
Sept. 17 2014 8:25 PM A New Song and Music Video From Angel Olsen, Indie’s Next Big Thing
Future Tense
Sept. 17 2014 7:23 PM MIT Researchers Are Using Smartphones to Interact With Other Screens
  Health & Science
Sept. 17 2014 4:49 PM Schooling the Supreme Court on Rap Music Is it art or a true threat of violence?
Sports Nut
Sept. 17 2014 3:51 PM NFL Jerk Watch: Roger Goodell How much should you loathe the pro football commissioner?