Costco bets it can outsell rivals in China by getting to know its customers better with big data

Seattle-based wholesaler relies on big data from early presence on Tmall.com, global reach in pursuit of the world’s third largest market in household spending

Costco is said to be planning a second store after Shanghai success as foreign peers like Carrefour, Metro cede control to local operators

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Customers make a beeline at Costco’s store opening in Shanghai on August 27, 2019. Photo: AFP

Published: 9:00pm, 22 Oct 2019Updated: 9:41pm, 22 Oct 2019

Costco opened its first store in China in late August to great fanfare. Analysts say whether it keeps up with local hypermarkets and online rivals, or follow the fate of Carrefour and Metro, will depend on one critical edge: big data.

The supermarket chain was forced to close its Shanghai store early on safety concerns after a mad rush for items ranging from Birkin handbags to Kweichow Moutai liquor. That is a foretaste of what to expect in a market with US$4.7 trillion in household consumption, according to 2017 World Bank data. Much of that frenzy has come from cultivating its customer profiles and their spending behaviour, analysts say.

The Seattle-based group, which started taking orders in China from its online store on TMall.com platform in 2014, had 98.5 million members globally as of September, according to its website. It operates 783 warehouses globally, including its maiden venture in China.

“The time they spend, the patience they had trying it out online, understanding Chinese consumers, their preferences on products and pricing and working with consumer profiles are very important,” said Zhang Tian Bing, consumer product and retail sectors managing partner at Deloitte Asia-Pacific. “They got themselves prepared to have the right products and the right marketing messages to consumers before they even launched a physical store.”

Big data, or large volume of information gathered from online sales, mobile and social media, allows businesses to make better and faster decisions by customising their products and services to match spending patterns, trends or behaviour.

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