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Gold bars and silver coins continue to show strong sales for Costco.
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The company sells an estimated $200 million a month of the metals.
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Although the markup is low, these valuable items help the company demonstrate strong e-commerce growth.
Gold bars and silver coins had another quarter of strong sales for Costco.
While the company did not reveal exact sales figures for the products in its third-quarter earnings results on Thursday, it did say the category was a top seller online, alongside devices, gift cards and e-tickets.
Analysts estimate the company sells about $200 million worth of gold and silver each month, and former CFO Richard Galanti has said the stock typically sells out “within hours.”
A large part of their appeal to both professional and amateur collectors is the fact that the bars and coins are sold at a very low price above the spot price of the metal. (Silver coins from the United States Mint command a small premium because they have tax benefits.)
But while Costco’s profits on gold and silver sales are relatively low, these valuable items represent something of a cheat code for the wholesale club still trying to develop its e-commerce business.
Passing hundreds of millions of dollars in sales through Costco.com is a quick way for the company to demonstrate strong e-commerce growth with relatively low risk or complicated capital investments: They simply buy a batch of gold and sell every ounce of it to members. .
The strategy is also paying off, with digital sales up 20.7% this quarter compared to the same period last year, before Costco’s gold went viral.
And since gold and silver are exclusive to members, the buzz surrounding the metals is another way to attract new signups. After all, what’s a $60 membership fee for a $4,000 shopping cart of gold bullion?
Read the original article on Business Insider
