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Gold bars and silver coins continue to show strong sales for Costco.
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The company sells an estimated $200 million per month of the metals.
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Though the markup is low, these high-value items help the company show strong e-commerce growth.
Gold bars and silver coins had another quarter of strong sales for Costco.
While the company didn’t break out exact sales figures for the products in its third-quarter earnings call Thursday, it did say the category was a top seller online, alongside appliances, gift cards, and e-tickets.
Analysts estimate the company sells around $200 million of gold and silver each month, and former CFO Richard Galanti has said the supply usually sells out “within hours.”
A big part of their appeal for professional and amateur collectors alike is the fact that the bars and coins are sold at a very low markup to the metal’s spot price. (Silver coins from the US Mint fetch a slight premium, since there are tax advantages to those.)
But even though Costco’s profit on the gold and silver sales is comparatively low, these high-value items are a kind of cheat code for the wholesale club that is still trying to develop its e-commerce business.
Routing hundreds of millions of dollars in sales through Costco.com is a quick way for the company to show strong e-commerce growth with relatively low risk or complicated capital investment: they simply buy a batch of gold and sell every ounce of it to members.
The strategy is paying off too — digital sales for the quarter were up 20.7% over the same period last year, before Costco’s gold went viral.
And, since the gold and silver are member exclusives, the buzz around the metals is another way to attract new sign-ups. After all, what is a $60 membership fee on a $4,000 shopping cart of gold bullion?
Read the original article on Business Insider
Source: finance.yahoo.com