How to Get Keto Products into Costco
In a retail world absolutely dominated by the unheralded growth of Amazon and other e-commerce behemoths, Costco is one of the few brick-and-mortar retail outlets that continue to show robust growth. Some people mistakenly equate Costco with nothing more than mega-packs of 96 toilet paper rolls and jumbo-size laundry detergent boxes that are really only fitting for families with several sets of triplets. What few people realize, however, is that Costco offers an incredibly diverse array of products, both in their brick-and-mortar stores and on their online platform. With a total annual revenue of US$141.576 billion in 2018, getting your keto products into Costco is a definite pathway towards increasing your customer base and boosting sales. In this brief overview, we outline everything you need to know to get your keto products into Costco.
Is Costco a Good Place for Keto Products?
Costco has been in operation for over 35 years and has 761 stores in 11 different countries. While many consumers associate Costco with those massive, warehouse-style stores that require membership for purchases, Costco also operates an online e-commerce website that doesn’t require membership fees. According to one recent estimate, Costco maintains around 94.3 million members around the globe, with millions more purchasing online every year.
As a massive retailer specializing in bulk and wholesale items, Costco might not seem like an ideal market for specialty low-carb or keto-positioned food items. In recent years, Costco, like most other retailers, has taken notice of the massive popularity of the keto diet and has begun to stock and specifically advertise its selection of these types of products. On their website, you can find a diverse listing of Keto-friendly food items ranging from protein powders to Almond Flour Crackers, and wholesale buckets (yes, buckets) of unsalted mixed nuts.
How to Market Your Brand or Keto Product to Costco
Keto and low-carb food brands have two different spaces where they can sell their products with Costco: the over 700 brick-and-mortar stores around the world or their .com website. While the “drawback” of selling in a brick-and-mortar Costco warehouse is that you will generally have to offer wholesale size and pricing, your brand will benefit from access to the 90 million loyal members of Costco. Higher-end and more expensive products that are geared towards individual sales are probably better suited for Costco´s online sales.
Before contacting a specific Costco office to offer your product (info on that in the last section of this article), there are several essential things to consider.
Despite specializing in wholesale, Costco actually offers huge manufacturer profit margins, mostly because the membership fees they collect provide an additional source of steady income for the company. According to one analysis, Costco will only keep around 20 points of a sale, which is less than half than other major retail stores. Despite these impressive profit margins, suppliers need to be prepared to offer the following:
- A minimum 15 percent discount for bulk orders compared to the pricing from other retailers with a similar product line,
- Unique packaging geared towards bulk purchases (no individually wrapped Keto bars to be sold at $5 a pop, unfortunately),
- And an ability to not market your entire product line as Costco will most likely prioritize a more extensive diversity of suppliers within a product line.
It is also important to mention that if you supply your product to other retail outlets and markets, those companies might also demand similar conditions if they discover that you are offering discounts to Costco.
Who Should You Contact at Costco?
For Keto food brands wanting to get their product into Costco, it is generally thought to be easier to get a product onto their website than onto the shelves of a brick and mortar store. Be prepared to send product samples (including a demonstration of your bulk packaging proposition) and organize a pitch that includes your Keto Certification will invariably validate your brand´s value proposition, product differentiation, and discounted wholesale price.
When you feel you are ready to reach out to Costco, you can contact their corporate office at the addresses below:
- The corporate mailing address is: PO Box 34331, Seattle, WA 98124
- Corporate office address (for in-person pitches): 999 Lake Drive, Issaquah, WA 98027
For Keto food brands, you can find a complete list of contact information for Costco´s appropriate division and international offices here.
Challenges to Selling Your Product at Costco
While getting your product into an internationally renowned retail store with millions of loyal members might seem like a surefire strategy for success, there are also specific challenges that come with selling your product at Costco.
People who shop at the brick-and-mortar Costco membership stores are generally not looking for luxury, high-end products. When you´re looking for the lowest price-per-unit toilet paper, you’re probably not going to expect individually-quilted, super-soft rolls. The same generally goes for food items. Because Costco specializes in low-cost, wholesale items, their customers will usually want larger quantities at reduced prices. This type of customer demand does not typically fit with specialized food items, which have tended to offer singular food products at a premium price.
Despite this fact, the rapid growth of interest in diets such as the Keto Diet, the Paleo Diet, and the Whole 30 Diet, amongst others, shows that there could be an increased demand for bulk, low-carb food items. According to one recent study, the Ketogenic diet food market is projected to grow at a compound annual growth rate of 5.3 percent during the forecast period 2019-2024. Furthermore, tens of thousands of restaurants around the country have dedicated low-carb meals and food items tailored toward the low-carb population. The restaurant market alone could continue to push demand for affordable, wholesale, low-carb, keto food products.