Costco opens first physical store in China, integrates mobile payment into experience

1 min read
Shoppers had to wait up to three hours just to get a parking space. (Image credit: TechNode)

Costco, the US warehouse club, opened its first store in China today, adding localized services including mobile payments via Alipay and WeChat Pay, as well as online promotions via WeChat’s official accounts function.

Why it matters: The US bulk-seller is building a brick-and-mortar presence in China even though other international retailers have struggled to succeed in the country.

  • Costco’s offline expansion in China comes as a lengthening list of Western retailers retreat from the market due to rising competition from domestic pure-play retailers and internet giants.
  • Suning.com acquired 80% equity interest in Carrefour’s China business in June. Tesco and Walmart have sold stakes to domestic partners, and German wholesaler Metro is reportedly looking to sell its China unit.
  • Along with supermarket chains like Sam’s Club, Australia’s Woolworths, and South Korea’s E-mart, Costco has already built an online presence by setting up flagship stores on Alibaba’s Tmall.
  • However, an offline store will put the brand in direct competition with its former e-commerce partners that are also looking to expand offline.

Details: Hoards of enthusiastic consumers in search of opening-day bargains descended on the new Costco store, located in suburban Shanghai’s Minhang District.

  • The store was forced to close as the crowd paralyzed local traffic and created public safety risks inside.
  • Costco’s stuttering start is yet another incident that highlights how easy Chinese consumers can get caught up in new things, following the hype surrounding Starbucks’s cat claw cup and Uniqlo & KAWS t-shirts. Several stores and wet markets are within walking distance of the new Costco.