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Costco Offers 2-Day Grocery Delivery with a Steep Markup

Costco unveils 2-day shipping program that leaves a lot to be desired.

In the wake of Amazon swallowing up Whole Foods, Costco has announced plans of its own to improve its online shopping game. But before you celebrate, the news isn't all good; shoppers can expect a price hike on digital orders. When you add in delivery and service fees, this new service could be increasing your grocery bill by 15% to 20%.

Two-Day Shipping with CostcoGrocery

Let's unpack the details. CostcoGrocery is a new two-day delivery program for non-perishable food items and other odds and ends. Delivery is free once your order reaches the $75 mark, otherwise you'll be hit with a $3 fee.

It sounds good in theory, but there's a caveat that isn't immediately apparent. Customers who are used to shopping in-store will notice a steep price increase when purchasing through CostcoGrocery. According to the store's website, this is to cover delivery and fulfillment costs.

Ordering Costco items online isn't anything new, but it's never been the norm for fresh groceries. The wholesale giant has long sold things like home improvement staples, office products, appliances, tires and more through its website, but perishable grocery items have been -- and will continue to be -- only available through Costco's Instacart partnership, which also makes the name "CostcoGrocery" feel very inaccurate.

Costco Delivers Same-Day for a Huge Upcharge

Now that Costco's got everyone talking about two-day delivery, the bulk retailer is using this opportunity to spotlight and expand its existing partnership with Instacart. The marketing is clear: If you want perishable food items or simply don't want to wait for two-day shipping, Instacart (which also doesn't require a Costco membership) is there to pick up the slack.

On-demand grocery delivery is a great service, but you'll also pay more when shopping via Instacart. How much more are we talking? You could be looking at as much as 17% more. A quick search for Kirkland toilet paper is a great example. If you order a 30-pack via CostcoGrocery, you'll pay $18.99; the price jumps to $19.59 on Instacart. While that $0.50 may not seem like a huge difference, it definitely adds up if you've got a full grocery order.

Additionally, delivery fees vary depending on the size of your order and the delivery time you choose. What's worse, Instacart says that if you select a high-demand delivery time, you may also get hit with an additional "Busy Pricing Fee," whatever that means. There's also an additional 10% optional service fee applied at checkout. It's akin to a tip, but it actually doesn't go directly to your shopper. (This is a default number that's tacked on automatically. Instacart explains here how to modify it.)

As SFGate reports, a $35 San Francisco-based Costco delivery made through Instacart could cost you anywhere from $5.99 to $11.99 in extra fees.

CostcoGrocery Isn't for Most Costco Shoppers

If you're like me and shop at Costco regularly, these offerings aren't a good deal at all. I'd personally rather brave the weekend crowd and long lines than overpay by such a large margin. There are some other drawbacks too, including the fact that Instacart and CostcoGrocery aren't available in all areas.

What's more, the latter doesn't make weekend deliveries. When you consider the big picture, AmazonFresh is looking more and more attractive for people who want groceries delivered.

What do you think? Will you be giving any of these Costco home delivery programs a whirl?



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About the Author
Marianne Hayes Contributor

Marianne Hayes is a freelance writer, wife and mother in Tampa Bay. After earning a degree in journalism and creative writing from the University of Central Florida, she spent nearly a decade getting lost in New York City and Los Angeles before making her way back home again in 2014. Marianne's writing has appeared in a variety of publications including The Huffington Post, Forbes.com, LearnVest, The Daily Beast and more. When she's not writing, Marianne is usually cruising her local bookstore with her two daughters.

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#2
I clicked on CostcoGrocery Kirkland Signature and I get a bunch of "No Image Available" looks like its not fully working yet.
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#3
Grocery delivery has been an unmitigated disaster for years. Many companies have tried for more than a decade to figure it out, but no one has gotten it right yet.

I like Costco, but I don't expect this to be any better. Amazon is similarly overpriced and overrated right now, but it will be interesting to see what happens with the Whole Foods merger. I'm not holding my breath, however.
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#4
Quote from TrentSteel
:
Grocery delivery has been an unmitigated disaster for years. Many companies have tried for more than a decade to figure it out, but no one has gotten it right yet.

I like Costco, but I don't expect this to be any better. Amazon is similarly overpriced and overrated right now, but it will be interesting to see what happens with the Whole Foods merger. I'm not holding my breath, however.
It's expensive, but it's probably a godsend for a lot of people to even have that option. For example, I broke my leg and have no realistically convenient way to go grocery shopping; even if I could physically get to the store, bringing them back upstairs is impossible.. I'm sure the same goes for seniors or anyone else somewhat physically disabled. (I'm recovering with family now so I don't use them, but in a couple months I'll be all on my own and look forward to using these services).

I'd rather the online products at Costco be more expensive, than to see a price increase storewide to make up for the cost of shipping products online.
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#5
Google express offers same prices as in store for costco with free shipping for orders over $35 and has same or next day shipping in many major markets. It seems much better deal than either of costcos new delivery services. The only things lacking are perishable products.
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Quote from acberry
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Google express offers same prices as in store for costco with free shipping for orders over $35 and has same or next day shipping in many major markets. It seems much better deal than either of costcos new delivery services. The only things lacking are perishable products.
This used to be the case. Not anymore. Compare the prices on G Express to in store and you will see a similar up charge to what this article says.
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#7
My daughter used the new delivery service and was charged $30 + fees on a $65 order of groceries and that included free delivery being her first time ordering. That should tell you enough about Instacarts charges. DON'T USE INSTACART!
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#8
My groceries had an upcharge of $53 and a $15 tip I would have saved $67 if I went to the store. I felt robbed and violated I learned my lesson. Awful that they're allowed to do this and make money off of unknowing customers I can see a 10% upcharge but. It bewrly 40%. The shopper accidentally left the store receipt with groceries I am in shock and disappointed Costco would allow instacart to rob their customers. Awful company
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#9
I was about to try grocery shopping on Costco.com via Instacart yesterday. In fact, I already compiled my entire list on before I realized that the prices seemed abnormally high. At that time, I did a little research to try to find out exactly how much more Instacart was charging for the service. The only thing I could find said that Instacart prices were higher than the warehouse prices, but never stated a figure. Well, I went to the warehouse and purchased everything there. My exact same list of items on Instacart came out to $212.67 before tax vs. $170.81 in the physical store. That's a 25% markup of $41.86!

The % markup varied by item, with the lowest markup being 19% on Kirkland Signature Premium Sliced Bacon, 4 x 1 lb. A couple of items were marked up well over 30%, including Clif Builder's Builder's Chocolate Mint/Chocolate Peanut Butter Variety Pack Protein Bar and eggs. In general, most items were right around 25% higher on Instacart.
I really liked the idea of saving some time and ordering online, but that's quite a bit more than I'm willing on a regular basis. Also, Instacart doesn't have nearly the same selection as the actual warehouse does.
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