How to become a supplier to Costco Australia

How to become a supplier to Costco Australia

07 November 2017

Peter Winter / Business Development Manager / Melbourne

You might be familiar with the Costco name in the American market, but it’s a global retailer with a major presence in Australia. 

This is the first in a series of blog posts to help New Zealand companies learn more about what major Australian retailers look for from suppliers. 

There are nine ‘big box’ Costco stores across the country, and they stock a massive range of products. You’ll walk into the store and find everything from kilo tubs of Vegemite to sixty-roll jumbo packs of toilet paper, right on up to $10,000 TVs.

With that kind of breadth, it’s well worth thinking about whether Costco could be the right retailer for your product in the Australian market.

Costco isn’t a discount store

First off, don’t be fooled by the name. Costco is not a bargain-basement retailer. 

The Costco model is to sell high-quality, name-brand products at wholesale prices. They don’t do house brands or budget lines. 

Australians go to Costco for brands they recognise and trust. Even at wholesale prices, they’re spending a fair amount of money each time (about A$130 per customer per visit). What they expect to get in return is a good deal on a great product - not the cheapest option in town.

So in short, if you’re trading on premium quality, Costco’s reputation means you won’t damage your brand in the Australian market.

What Costco wants in a supplier

Are your products ready for Costco? 

Once you’ve sorted out your compliance for the Australian market, you need to ask yourself if you can meet Costco’s three biggest requirements for a new supplier.

Shelf-ready product

Unlike many other retailers, Costco requires all its suppliers to deliver shelf-ready product that comes in a ready-to-sell, self-merchandising unit. That way it can place your products straight on the shelf, without unpacking or repacking. 

Products that only come packed in bulk cartons won’t get ranged in Costco.

Quality and innovation

Costco’s always looking for something new to offer its customers. Having an innovative point of difference will also help you stand out from all the other suppliers trying to be ranged in-store. 

Maybe you’re offering a completely new product or category, a higher-specced or higher-quality version of an existing product, or new functions or benefits that existing competitors can’t match. Ask yourself what sets your product apart in the Australian market. That way you’ll be ready when Costco asks you the same question.

Competitive pricing

It’s a no-brainer, but Costco will want to see competitive pricing from you as well as high-quality product delivered ready to sell. 

Make sure you’ve done your pricing homework and know your final bottom line before you get into a room with Costco buyers.

Take a look instore

I shot some video on a recent visit to Costco’s Docklands store in Melbourne. Take a look through and you’ll get a sense of what the experience is like, and how Australian Costco shoppers will be seeing your product.

Read the video transcript.

Quick facts

Here’s a few more updated quick facts to bear in mind (some differ slightly to those mentioned in the video as they contain the latest data, which came out post-filming):

More information

If you’d like more information to help you take your business to the next level in Australia, contact the team at NZTE.