Dive Brief:
- Costco’s digital experience enhancements were a significant sales driver for the second consecutive quarter, EVP and CFO Gary Millerchip said on a Q3 2026 earnings call last week. Personalized product recommendations carousels contributed just under $500 million in digital sales, following $470 million the quarter prior.
- The digital carousels drove conversion rates three times higher than Costco’s typical conversion rate, according to Millerchip.
- “Delivering a more personalized experience for our members is a key focus, and we continue to make progress in this area,” Millerchip said.
Dive Insight:
Costco’s digital growth was a highlight for the warehouse club, and the leaders have put an emphasis on increasing membership renewals from digitally focused customers.
Traffic to Costco’s website and app was up 37% during the quarter, according to Millerchip. Multiple product categories saw double-digit digital growth, including pharmacy, home furnishings and housewares.
However, members who sign up online renew at a slightly lower rate than members who join at a physical location, according to Millerchip. As a result, the growing share of digital-first members has applied downward pressure on Costco’s overall renewal rate.
Costco responded by implementing targeted digital communication and retention strategies aimed at these customers, Millerchip said. In the third quarter, this effort “more than offset the negative impact from this mix change in our membership base.”
Costco’s membership rose 4.1% year over year to 82.9 million total paid members in the third quarter of 2026, according to Millerchip. Membership fee income rose 10.7% year over year to $1.4 billion, driven by a combination of membership growth, fee increases and upgrades to higher-tier Executive Memberships.
Costco saw 9.8% year over year comparable sales growth in the third quarter of 2026, according to an earnings report. Net sales rose 11.6% year over year to $69.2 billion.
Costco is investing in multiple forms of technology to continue improving its experience both online and in-store.
AI “has the potential to be a significant sales opportunity for Costco,” Millerchip said. Volume from AI search remains low, but the retailer saw triple-digit AI search traffic growth in the third quarter, and this activity has the highest conversion rate of all website traffic.
The retailer’s other recent improvements include quick access to digital membership cards in the Costco app and improvements to the digital wallet, according to President and CEO Ron Vachris.
“In digital, we're making meaningful strides to deliver a more seamless and convenient experience for our members across the warehouse and online,” Vachris said.
