Costco's AI-Powered E-Commerce Sales Jump 22.6% as Automated Checkout Cuts Transaction Time to 8 Seconds
Costco deployed AI-powered product recommendations on its online store and generated more than $470 million in e-commerce sales in a single quarter, with digitally-enabled comparable sales surging 22.6%. The wholesaler is also piloting automated pay stations that process pre-scanned orders in an average of eight seconds, according to CEO Ron Vachris.
Online traffic climbed 32% and app traffic jumped 45% in the second quarter. Sales across pharmacy, jewelry, toys, tires, and housewares all grew double digits year-over-year. Same-day delivery through Instacart, Uber Eats, and DoorDash grew faster than overall digital sales.
Warehouse Operations and Staffing
The digital enhancements have allowed Costco to handle increased volume without adding headcount. Mobile wallet improvements, pharmacy pay-ahead features, and employee pre-scan technology have cut checkout times and improved employee productivity.
Vachris said the automation "improved the member experience and it's making the throughput much better." The company also added AI tools to improve pharmacy inventory positions and streamlined the pharmacy checkout process.
Membership and Financial Results
Costco ended Q2 with 82.1 million total paid members, a 4.8% increase from the prior year. Membership fee income rose 13.6% to $1.355 billion. Net income reached $2.035 billion, up nearly 14% from $1.788 billion in Q2 2025.
The company operates 924 warehouses worldwide and plans 28 new openings this fiscal year, targeting 30-plus annual store launches in coming years.
Tariff Strategy and Pricing
Costco is managing tariff impacts through multiple channels: relocating production where feasible, consolidating global buying efforts, and prioritizing its Kirkland Signature private label. The company said it did not pass the full tariff cost to members in many cases.
The tariff landscape remains unsettled. A Supreme Court ruling on February 20 struck down the Trump administration's use of the International Emergency Economic Powers Act to impose tariffs. The administration then enacted a 10% across-the-board tariff under different legal authority, valid for 150 days and potentially extendable by Congress.
U.S. Customs and Border Protection has collected approximately $166 billion in tariffs since January 2025. The agency announced it is revamping its system to process refunds, though the timeline and mechanics remain unclear. Vachris said Costco will commit to returning any refunds to members through lower prices, pending clarity on the refund process.
Digital Roadmap Ahead
Costco said it is working with leading AI companies to ensure its value proposition reaches both current and potential members through their AI tool interactions. The company expects digital-enabled sales to grow faster than overall sales going forward.
CFO Gary Millerchip said the company has "a clear road map for future digital enhancements" that will sustain this growth trajectory.
For executives overseeing digital transformation and operational efficiency, Costco's approach demonstrates how AI can drive measurable revenue gains while improving customer experience. Learn more about AI for Executives & Strategy and AI for Operations.
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