⚠ E-Commerce Rewards the Opposite DisciplineModerate threat

Costco Wholesale (COST) — threat to the moat

The warehouse wins by stocking 4,000 items; the website already carries 10,000, and that is the direction of travel.

The warehouse is optimised for a narrow assortment. The internet is optimised for an infinite one, and the two logics do not merge cleanly.

Comparable sales growth, Q3 FY2026+21%Digitally enabled+7%Core merchandiseOnline assortment is 9,000-10,000 items against under 4,000 in the warehouse.
The channel growing three times as fast is the one that rewards endless choice, which is the opposite of the discipline that produces Costco's buying power.

Costco already runs two different businesses on this axis: fewer than 4,000 items in the core warehouse, 9,000 to 10,000 online1. The second number is the direction of travel, because a website has no shelf constraint and every additional item is an additional search a member might otherwise run on a competitor's site. E-commerce was roughly 7% of net sales in fiscal 2025 and digitally-enabled sales about 10%2, and digitally-enabled comparable sales grew 21% in the third quarter of fiscal 2026 against 7% for core merchandise3.

The tension is that the online assortment does not carry the warehouse's economics. An item ordered singly and shipped to a house is not a pallet sold to a member who drove there; it has fulfilment cost, packaging cost, a higher return rate and no basket attached. Costco's own quarterly gross margin commentary has repeatedly credited e-commerce with helping the ancillary margin line while core merchandise margin fell, which is encouraging and is also a small number growing fast against a large number growing slowly.

If digitally-enabled sales keep compounding at twenty percent, they reach a quarter of the company inside a decade, and at that point the SKU discipline that produces the buying leverage applies to three-quarters of the business rather than all of it. That is not a crisis. It is a slow dilution of the mechanism, and the measure is the online assortment count, which Costco discloses in the 10-K each year.

References
  1. ReportedCostco already runs two different businesses on this axis: fewer than 4,000 items in the core warehouse, 9,000 to 10,000 online.
    Costco Form 10-K, fiscal year ended August 31, 2025 - Item 1 Business (membership counts and renewal rates, warehouse and gas-station counts, under 4,000 SKUs, Executive tier and the 2% reward, human capital and wages, competition, Kirkland Signature) — FY2025 · publ. October 8, 2025 · source ↗
  2. ReportedE-commerce was roughly 7% of net sales in fiscal 2025 and digitally-enabled sales about 10%, and digitally-enabled comparable sales grew 21% in the third quarter of fiscal 2026 against 7% for core merchandise.
    Costco Form 10-K, fiscal year ended August 31, 2025 - Item 1 Business (membership counts and renewal rates, warehouse and gas-station counts, under 4,000 SKUs, Executive tier and the 2% reward, human capital and wages, competition, Kirkland Signature) — FY2025 · publ. October 8, 2025 · source ↗
  3. ReportedE-commerce was roughly 7% of net sales in fiscal 2025 and digitally-enabled sales about 10%, and digitally-enabled comparable sales grew 21% in the third quarter of fiscal 2026 against 7% for core merchandise.
    Costco Form 10-Q, quarter ended May 10, 2026 - MD&A (comparable sales +10% and +7% excluding fuel and currency, ticket +7% against frequency +2%, membership fees $1,373M, renewal 92.2% and 89.7%, gross margin 11.04%) — Q3 FY2026 and the first 36 weeks · publ. June 3, 2026 · source ↗
Sources
Generated September 23, 2026