What Amazon Has Learned From Costco

Amazon's Prime was modeled, in part, on Costco membership strategy.

Costco has also used incentive sales of gasoline and food as a means of driving in-store traffic, which is yet another tactic Amazon has adopted with its new delivery services. Both companies are based in the Seattle area and have learned from each other.  JL

Kate Taylor reports in Business Insider:

Costco has been able to hold its own because of its membership model and ability to incentivize visits to brick-and-mortar locations.
Costco stock is on the rise after a strong November led to analysts declaring the company "Amazon-proof."
Deutsche Bank's Paul Trussell upgraded Costco's rating from hold to buy and raised the price target from $152 to $200, saying that Costco's potential was too great to ignore.
The upgrade followed Costco's announcement that November same-store sales were flat, beating Thomson Reuters' estimates of a 0.9% decline. When gas and foreign exchange were excluded from the equation, comparable sales rose 6%.
Becoming "Amazon-proof" is an enviable position for any retailer, as the company's online dominance has most major retailers such as Target and Walmart playing catch-up.
But Costco has been able to hold its own because of its membership model and ability to incentivize visits to brick-and-mortar locations.
Membership programs are on the rise, with services such as Amazon Prime and online-grocery startups quickly growing. While there are newcomers in the membership area, Costco's 44.6 million households is an enormous number, accounting for $785 million in sales in the fourth quarter.

Costco has been able to incentivize in-store visits by offering items that members need or prefer to buy in person — namely, gasoline and food.
Gasoline serves as a huge part of Costco's business, with recent low gas prices driving down same-store sales while helping encourage new members to sign up. As for food, in addition to its grocery business, Costco offers a food court with enough influence to become one of the largest pizza chains in the US — perhaps helping inspire Urban Outfitters' recent pizzeria purchase.
While Costco has struggled with issues such as an E. coli outbreak in recent months, the company's future is looking bright. There are a number of what Trussell calls "catalysts" for change on the horizon, including growth of organic food, higher gas margins, and the company's switch to Visa credit cards.