Costco makes a major same-day delivery change

Most people think of Costco as the warehouse club where you visit, checking its aisles for old favorites and unexpected items. 

It’s rare that anyone thinks of Costco as an online retailer or a place that offers same-day shipping. In reality, over the past few years, the warehouse club chain has built a somewhat robust website.

The Costco website even offers some items through third parties that are not sold in the chain’s warehouses. In addition, there are extended offerings of bulky items like furniture and appliances.

Unless you are a member, you may not realize that Costco also offers same-day delivery through its partnership with Instacart.

And anyone who has used that service may not be aware that prices on those delivered items may be, and usually are, higher than what they'd pay in stores.

That’s actually common for any delivery service. When you order dinner through Uber Eats or DoorDash, you often pay a higher price than you would picking up or dining in.

Costco lowers its Instacart prices

In the case of Costco, however, members may not have expected that, because of the chain’s reputation for having low prices. The retailer, and not Instacart, sets prices for items.

The delivery service has been pushing for chains to offer price parity, or only small markups.

“Earlier this year, Instacart announced that Schnuck Markets, Heritage Grocers Group, and home improvement chain Lowe’s switched to price parity. Walmart Canada lowered its markup, as did Costco on its same-day delivery websites for the U.S. and Canada," Instacart shared in a report.

Instacart also shared why that's a good thing.

"Grocery prices continue to be top of mind for consumers, and we know that working with retailers to offer their customers affordable prices is key to helping them drive faster growth and accelerate online grocery adoption. On our platform, retailers that price items at in-store parity consistently grow faster on average than those with markups," the study showed. 

Costco shared why its prices are higher on Instacart

The warehouse club did acknowledge that Instacart prices are higher in an FAQ on its website.

"Costco’s item prices are marked up higher than your local warehouse, however, the item markup is reduced for Costco members. The order minimum is $35. This pays for the delivery service and to provide competitive pay to all shoppers working on the Instacart platform. Unlike a tip, which can only go to the shopper delivering your order, a markup allows Instacart to pay all shoppers (including those, for example, that also pick ordered items in the warehouse)."

Related: Costco vs. Sam’s Club: Memberships, prices, & perks compared

Delivery grocery prices have traditionally been higher

Traditionally Instacart, like Uber Eats, and regional grocery chains have marked up prices. A 2023 study from GoodWater shared how that works:

Instacart has 3 pricing levels:

• Everyday store prices: Prices are the same as in-store
• Prices vary from in-store: Prices could be the same or higher than in-store
• Higher than in-store prices: Prices are higher than in-store

"From our data scraping, we find that 84% of grocery store prices are different from in-store prices, and that they are almost always higher," GoodWater found. 

Related: 99-year-old retail chain quietly closes over 500 stores

There's a reason Costco does not offer the exact same prices in store and via Instacart, according to GlobalData Managing Director Neil Saunders.

"The rub is that shopping via third party apps does not give consumers access to the sharp Costco prices found in stores. Ranges can also be more limited, and you don’t get the full in-store experience with tasting and bargain hunting. For these reasons, these partnerships are incremental to, rather than a threat to, traditional memberships," he told RetailWire. 

Costco, it should be noted, does not require a membership to shop its warehouses via Instacart. It does, however, offer members better prices.

FAQ on how Costco's deal with Instacart works

• Do I need a Costco membership? No. Non-members can order through Instacart, but members often get better prices when ordering via Costco.com (same-day delivery powered by Instacart).
• Are prices the same as in-store? No. Online prices are typically 10–20% higher than warehouse prices.
• Where do I order?
•  Instacart app/site: No membership required, higher markups. 
• Costco.com (Instacart powered): Membership login, slightly lower prices.
• What about fees?
• $3.99-$7.99 delivery fee (if under $35), plus service fees and tip.  
• Instacart+ members get free delivery on $35+.
• Can I get all Costco products? Selection is limited; fresh groceries and household staples are common, but not all warehouse items are available.
• Do Costco coupons work? No. In-store promotions don’t apply.
• Can I return items? Yes, most can be returned at Costco warehouses.

Related: 70-year-old supermarket chain closing multiple locations