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Is Costco's BNPL Push a Catalyst for Big-Ticket E-Commerce?
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Key Takeaways
Costco's BNPL launch with Affirm targets high-ticket e-commerce categories like appliances and furniture.
Early momentum plus 31% growth in large-item deliveries may help expand Costco's digital presence.
Q3 e-commerce comparable sales jumped 14.8%, with BNPL positioned to deepen Costco's digital growth.
Costco Wholesale Corporation (COST - Free Report) has made a bold move into digital retail with its recent Buy Now Pay Later (“BNPL”) initiative. Partnering with Affirm, the company now offers flexible installment payments on high-ticket categories such as appliances, furniture, consumer electronics and more through its e-commerce platform. Though still in its early stages, management noted encouraging initial sales trends during the third quarter of fiscal 2025. Costco's latest move is not just about convenience but about providing consumers with access to a wide range of affordable, high-quality products.
With inflation still pressuring discretionary spending, BNPL can lower psychological purchase barriers, particularly among younger shoppers and budget-conscious households. Given Costco’s strength in delivering value through limited SKUs and high volumes, this financing option could unlock new purchasing behavior in large-item categories that typically require up-front capital. Costco Logistics saw a 31% year-over-year increase in big and bulky e-commerce deliveries in the last reported quarter, an area where BNPL may further accelerate adoption.
This strategic move also aligns with broader retail trends, where flexibility in payment options is becoming a key part of consumers’ purchase-making decisions. The added convenience could enhance Costco's competitive edge in the fast-growing e-commerce landscape, allowing it to better capture market share in high-ticket categories that were previously less accessible to certain demographics. Well, Costco’s e-commerce comparable sales jumped 14.8% in the third quarter, and BNPL could deepen that momentum.
How Are Costco Rivals WMT & AMZN Approaching?
While Costco’s BNPL rollout is in its nascent stage, competitors like Walmart Inc. (WMT - Free Report) and Amazon.com, Inc. (AMZN - Free Report) have already embedded installment options into their ecosystems. Walmart offers BNPL both online and in-store, with a particular focus on seasonal items and electronics. This move aligns with Walmart's broader strategy to boost its e-commerce presence and cater to a growing base of price-sensitive consumers.
Amazon has introduced Amazon Pay Later, allowing shoppers to break up their purchases into convenient monthly payments. The service aims to reduce the burden of paying the full amount upfront, giving customers easier access to higher-priced items while helping them manage their budgets more effectively.
Costco’s Price Performance, Valuation and Estimates
Costco stock has been a standout performer, with shares rallying 14.8% year to date, outpacing the industry’s growth of 8.7%.
Image Source: Zacks Investment Research
From a valuation standpoint, Costco's forward 12-month price-to-earnings ratio stands at 54.21, higher than the industry’s ratio of 34.39. COST carries a Value Score of D.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Costco’s current financial-year sales and earnings per share implies year-over-year growth of 8.1% and 11.9%, respectively.
Image: Bigstock
Is Costco's BNPL Push a Catalyst for Big-Ticket E-Commerce?
Key Takeaways
Costco Wholesale Corporation (COST - Free Report) has made a bold move into digital retail with its recent Buy Now Pay Later (“BNPL”) initiative. Partnering with Affirm, the company now offers flexible installment payments on high-ticket categories such as appliances, furniture, consumer electronics and more through its e-commerce platform. Though still in its early stages, management noted encouraging initial sales trends during the third quarter of fiscal 2025. Costco's latest move is not just about convenience but about providing consumers with access to a wide range of affordable, high-quality products.
With inflation still pressuring discretionary spending, BNPL can lower psychological purchase barriers, particularly among younger shoppers and budget-conscious households. Given Costco’s strength in delivering value through limited SKUs and high volumes, this financing option could unlock new purchasing behavior in large-item categories that typically require up-front capital. Costco Logistics saw a 31% year-over-year increase in big and bulky e-commerce deliveries in the last reported quarter, an area where BNPL may further accelerate adoption.
This strategic move also aligns with broader retail trends, where flexibility in payment options is becoming a key part of consumers’ purchase-making decisions. The added convenience could enhance Costco's competitive edge in the fast-growing e-commerce landscape, allowing it to better capture market share in high-ticket categories that were previously less accessible to certain demographics. Well, Costco’s e-commerce comparable sales jumped 14.8% in the third quarter, and BNPL could deepen that momentum.
How Are Costco Rivals WMT & AMZN Approaching?
While Costco’s BNPL rollout is in its nascent stage, competitors like Walmart Inc. (WMT - Free Report) and Amazon.com, Inc. (AMZN - Free Report) have already embedded installment options into their ecosystems. Walmart offers BNPL both online and in-store, with a particular focus on seasonal items and electronics. This move aligns with Walmart's broader strategy to boost its e-commerce presence and cater to a growing base of price-sensitive consumers.
Amazon has introduced Amazon Pay Later, allowing shoppers to break up their purchases into convenient monthly payments. The service aims to reduce the burden of paying the full amount upfront, giving customers easier access to higher-priced items while helping them manage their budgets more effectively.
Costco’s Price Performance, Valuation and Estimates
Costco stock has been a standout performer, with shares rallying 14.8% year to date, outpacing the industry’s growth of 8.7%.
Image Source: Zacks Investment Research
From a valuation standpoint, Costco's forward 12-month price-to-earnings ratio stands at 54.21, higher than the industry’s ratio of 34.39. COST carries a Value Score of D.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Costco’s current financial-year sales and earnings per share implies year-over-year growth of 8.1% and 11.9%, respectively.
Image Source: Zacks Investment Research
Costco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.