Costco Launches Search Campaign For Food Delivery Service

Costco, which has long emphasized the stability of in-store experiences, recently launched a home delivery service to keep up with rivals such as Amazon's Whole Foods. Along with the CostcoGrocery service came a paid-search online advertising campaign touting a two-day nationwide delivery service. It also offers same-day delivery in some metro areas.

AdGooroo's analysis found that Costco took the second position, following Instacart, in U.S. Google desktop text ad impressions and clicks on 38 grocery delivery-related keywords, including "grocery delivery," "online grocery shopping" and "grocery delivery services." The analysis took place from October 27 -- the first time AdGooroo identified Costco data -- through November 9, 2017.

During the 14-day period analyzed, Instacart took 23.5% click share. Costco took 11.4% click share, beating established players like Hello Fresh at 8.2%, Walmart’s Jet.com at 7.8%, and Walmart at 7.7%. 

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Amazon, which made headlines in August with its acquisition of Whole Foods, took a mere 3.5% click share for the grocery delivery keyword group.

Costco's share of voice in grocery delivery came far closer to Instacart, capturing 14.6% of impressions on the keyword group compared with Instacart at 17.1% share of impressions.

Despite its recent success in paid-search advertising, Costco may have a challenge converting new grocery delivery customers that its competitors on the keyword group do not. Specifically, the warehouse club charges a $60 to $120 upfront membership fee in order for consumers to shop in its stores or use its same-day grocery delivery service, whereas other online grocery providers like Instacart charge a smaller fee per delivery (typically $5 to $7), or offer free in-store pickup like Walmart.

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