Costco’s Bid to Turn Customer Data into Profits

Costco, which ranks among the three largest retailers in the US (and globally), is joining the club of big corporations with access to massive amounts of customer data, who are launching various schemes to monetize that data.

Costco’s plan, still in the testing phase, is to develop a way to target ads at customers both on its website and in stores. The numbers are staggering and draw from the retailer’s loyalty program: the shopping behavior of people in 75.5 million households. And – a membership card is a requirement for anyone shopping at Costco.

The promise of access to shopping habits inevitably includes past purchases and the corporation’s Assistant Vice President of Retail Media Mark Williamson also promised future partners that they will be able to not only target ads (“reach”) members of the Costco loyalty program, but also, “reach the right members in the right context based on past behavior.”

Costco’s effort to keep up with the trends in both retail and ad industries is evident in the fact that Williamson’s job was only created last September.

The race to start using customer data for advertising is rapidly spreading beyond Big Tech and to the likes of Walmart, and Target, but also mega banks, financial institutions, and hotel chains.

Some observers believe these new players in the market have realized they can fill some gaps in the lucrative business created by regulatory efforts, which aim to protect personal data in those places where it has traditionally been harvested and monetized until now – on Big Tech platforms and services.

Playing up the benefit that creating the ad network will supposedly have for customers, Williamson is quoted as saying that the huge profit the giant looks likely to generate in this way will be “reinvested to keeping prices low.”

What is certain to have a low price tag attached to it is the cost of retailers like Costco getting into the advertising business. It’s cheap to run ads, and customers will keep returning whether the ads are there or not, reports note.