The warehouse retailer, which has been slow to invest in e-commerce in the past, appears to have a renewed focus on the web, with new features aimed at protecting its share of the grocery market.

Costco Wholesale Corp. had a big quarter on the web, as the warehouse retailer this week reported a 27% increase in e-commerce sales for the prior three months, with a 15% year-over-year gain for the full fiscal year.

Online sales reached $4.6 billion for the year, or roughly 3.6% of its total sales of $126.7 billion.

Company executives, who in the past have been hesitant to focus on the retailer’s e-commerce business, said that most of the retailer’s efforts in the last year around digital involved improving’s functionality. “We improved search, streamlined the checkout process, improved our members’ ability to track their orders and automated much of the returns process,” Richard Galanti, chief financial officer, told analysts on a conference call transcribed by SeekingAlpha.

Costco, No. 9 in the Internet Retailer Top 1000, also improved its online assortment during the quarter, adding brands such as outerwear maker Marmot and GE Appliances.

Also, the retailer this week launched CostcoGrocery, which offers two-day delivery of just under 500 non-perishable grocery SKUs. Shipping is free on orders more than $75. It also expanded its arrangement with Instacart to offer free same-day delivery on roughly 1,700 SKUs, dry and perishable grocery items at 376 U.S. locations. More will be coming online this year and next year, Galanti said.


For the fiscal year ended Sept. 3, Costco reported:

  • Net sales of $126.17 billion, an 8.7% increase compared with $116.07 billion in the prior fiscal year.
  • Membership fees of $2.85 billion, a 7.5% increase compared with $2.65 billion.
  • Net income of $2.68 billion, up 14.0% compared with $2.35 billion.

For the fourth quarter, Costco also reported:

  • Net sales of $41.36 billion, up 15.8% from $35.73 billion in the fourth quarter of the last fiscal year.
  • Membership fees of $943 million, a 13.3% increase compared with $832 million.
  • Net income of $919 billion, up 18.0% from $449 million.