As Costco plans to expand its operations, it is important to improve customers’ satisfaction by improving its customer service. Costco Wholesale can take several measures to improve its customer service. Achieving the objective of improving customer service is necessary for retaining the current market while at the same time penetrating new markets that are under competitors’ dominance. Therefore, Costco should consider adopting the following strategies to improve its customer service.
How to Improve Customer Service
Compose customer assistant between 5 by 5 rows
Costco should consider placing enough staff to assist customers in the stores. Specifically, the stores should consider placing customer assistant personnel between five by five rows. The idea is to ensure that enough assistants are available to assist the customers find the goods their looking for. Availing enough assistants is critical in improving customer service in a bid to avoid customers’ dissatisfaction (Jiao et al., 2015). Once the customers become happy with the service, thy will be more than willing to recommend the stores to their relatives and friends. In doing so, the company will achieve its objective of expanding its operations.
Improve Delivery System
The delivery system is a crucial component in the company’s supply chain. Therefore, improving the delivery system is critical for efficient movement of goods from the company’s stores to the retailers (Jiao et al., 2015). The idea behind this recommendation is to improve the efficiency of the supply chain. In particular, the company should focus on availing the products promptly. In doing so, retailers can restock on time and ensure that customers can access the products whenever they need them. Consumers are usually keen on whether they find what they ate looking for or not. The failure to replace sold items leads to customers’ dissatisfaction since they will not find what they are looking for. Therefore, improving the delivery system will not only improve the satisfaction of the retailers, who are the direct customers, but also the consumers, who are the end users.
It is also worth noting that Costco Wholesale Corporation is offering online shopping for its members. The online platform allows the members to conduct window-shopping, where they can order for products, pay using online payment, and wait for the company to deliver the product to their homes or businesses premises. As mentioned earlier, the strategy of expanding the company’s operations will bring more members on the online platform. Therefore, the business will need to expand its delivery system to accommodate the increase demand for delivery. The thought is to invest more on the company’s logistical capacity. In so doing, it will be possible to deliver products on promptly regardless how many members request for such services.
Get named by Costco Credit Card
The company should also consider naming its buyers by its credit card. The purpose of improving customer service is to forge close ties between the business and its buyers. Costco’s success past, current, and future success depends in its ability to retain repeat customers through multiple membership plans. The membership plans allows members to use credit cards to transact with the wholesaler. Offering own credit card and allowing members to transact using the credit card will play a significant role in improving consumers’ satisfaction. Firstly, the credit card will improve convenience since buyers can save time associated with searching for ATM machines (Lin, Wang, Yang, & Sekarini, 2013). Secondly, buyers can enjoy incentive plans depending on the volume of purchases they make (Lin et al., 2013).
Business process improvement
Venturing into a New Country
For years, Costco has been focusing on the American and Canadian markets. Internationally, the company has started operating in several countries such as Australia, the Japan, South Korea, Spain, Taiwan, and the three nations making up the United Kingdom. Apparently, the wholesaler concentrates on just a few markets yet many countries have liberalized their markets. There is a need to venture into more markets to take advantage of opened markets around the globe. It is worth noting that Costco is working with retailers who are the already operating outside the United States. Since the company’s operations is limited with the US, it is impossible to supply cater for the needs of such customers. Consequently, Costco’s customers have to operate in a different supply chain, where other wholesalers take the position of Costco Corporation. Therefore, venturing beyond the United States is a smart move to globalize the company’s supply chain. In doing so, retailers who are interested in operating in other countries will be able to expand their operations whenever they are ready. While many countries offer opportunities for expansion, the markets do not necessarily offer equal opportunities. Therefore, Costco should consider strategically identify the most ideal market and take several measures that would facilitate the expansion.
Open Physical Branch in China
In line with the expansion of operation, the company should consider establishing a physical branch in China. There are several reasons that make China an Ideal country for setting up the first branch beyond the United States. Firstly, China is the most populous country the world. The massive population makes China the largest market in the globe within a national boundary. Secondly, China has been experiencing positive economic growth in the last decade. The increasing number of citizens joining the middle-income subgroups is equally important since it reflects the strong purchasing power of the Chinese population. Most US-based retailers have been choosing the Chinese market as their favorite international market due to the same reasons. Therefore, setting a physical branch in China is a strategic move to attract both local and international retailers operating in China.
Get Membership Fee
After venturing into the Chinese market, the next step will be to find members. Currently, the company charges US$55 membership fee per year. Once households pay the individual membership fees, they can access the stores and make purchases at wholesale prices. Alternatively, the company charges extra fee for businesses wishing to access its products at wholesale prices. Therefore, businesses in the retail industry can only join Costco’s supply chain by registering as members. It is worth noting that the Chinese market differs from the American market; therefore, the company will need to adjust the membership fee to accommodate the economic status of the Chinese population. Ideally, the company should consider lowering the membership fee as a way of attracting more Chinese households and businesses (Marinova & Singh, 2014). Currently, other competitors have dominated the Chinese market making it difficult for new entrants to penetrate. Therefore, charging reasonable membership and providing competitive prices will be critical in assisting Costco penetrate and retain a reasonable market share in China.
Improve Return Policy
As indicated earlier, the service improvement is equally critical since it will encourage more households and businesses to seek Costco’s membership. The return policy is a critical policy that dictates the willingness of customers to continue working with the wholesaler (Ketzenberg & Zuidwijk, 2009). Therefore, there is a need for the company to improve its return policy as a way of retaining customers and ensuring that they renew their membership every year. Just like other profit-making organizations, the overriding objective of expanding Costco’s operation to the Chinese market is to increase its profitability. Therefore, the return policy should focus on ensuring that returning of goods does not affect the financial performance of the organization. However, the policy should be fair and appealing to the customers. This recommendation is because some innocent customers need a fair return policy that allows them to return faulty products. On the other hand, it is necessary to prevent fraudulent return by specifying how long the consumers should wait before returning the product (Srivastava, 2008). On the same note, the company should consider posting visible terms on its Chinese website and stores. Such transparency will assist in informing customers in advance and giving them a feeling of security that encourages them to purchase products that Costco sells.
Regarding the return policy, it is important to note that Costco Corporation might need a country-specific return policy that represents the return habits of the Chinese customers. In brief, every society tends to subscribe to a different consumer behavior depending on the country-specific economic, social, and cultural factors (Dawar & Stornelli, 2013). Therefore, the best way to develop a return policy is to employ a method that tracks the return habits of the Chinese consumers. In so doing, it will be possible to evaluate the cases of fraudulent returns and honest returns and identify an ideal return policy that will improve consumers’ satisfaction while at the same time avoid fraudulent returns that might affect financial performance of the corporation.
In summary, Costco Wholesale Corporation stands a chance to improve its performance by expanding its operations, improving customer service, and venturing into the Chinese market. In particular, the strategies can assist Costco to improve service delivery. Regarding operational range and developing services, establishing smaller stores at the county levels will assist the company to reach more mall buyers. Rebuilding Costco self-check system with assist the wholesaler to accommodate the increased sales associated with increase the range of operations. On the same note, improving the evolution of services will assist Costco to cater for the ever-changing preferences of consumers in the wake of increased technological advancement. Lastly, vendor-managed inventory will assist the company to operate profitably by engaging vendors in its expansion process.
Concerning customer service improvement, composing customer assistant between five by five rows will make it easier for buyers to access what they need with ease. Similarly, improving the service delivery system anytime and anywhere will improve the convenience; therefore, encourage more buyers to shop at Costco’s stores. Allowing member to use Costco’s credit card is yet another measure that will significantly improve its customer service. While expanding operations with Costco’s current markets, expanding to other countries a crucial expansion opportunity that the Wholesaler’s management team should consider. Specifically, this study recommends China as the most ideal market worth venturing thanks to massive market size and the economic prosperity that China has experience in the last decade. Costco should take the opportunity to enroll new members into different membership plans. On the same note, Costco should consider improving the return policy by first examining how the Chinese take advantage of the policy governing the return of goods.
Dawar, N., & Stornelli, J. (2013). Rebuilding the relationship between manufacturers and retailers. MIT Sloan Management Review, 54(2), 83-90.
De Leeuw, S., Grotenhuis, R., & Van Goor, A. R. (2013). Assessing complexity of supply chains: Evidence from wholesalers. International Journal of Operations & Production Management, 33(8), 960-980.
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Hu, F. L., & Chuang, C. C. (2009). How can different brand strategies lead to retailers' success? Comparing Manufacturers brand for Coca-cola and Private Brand for Costco. Journal of Global Business Issues, 3(1), 129-135.
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