At Costco’s earnings call last week the wholesale retailer reported a strong quarter, gaining strength even during the recession. However the big news of the day was the confirmation that the retail giant will be ending their partnership with Apple. The split is apparently a mutual agreement between the two companies.
The split makes sense from the perspective of both companies. Costco’s business model is selling bulk products at a cheap price and presentation of the products isn’t a very high priority. Apple is on the other side of the spectrum where style and image is paramount and the price tag follows that image. The two models don’t meld together very well, even though Costco’s direct competitor, Sam’s Club, still has a strong relationship with Apple.
Costco was also playing at a disadvantage compared to its competitors. Whereas stores like Walmart are able to sell the products on their website, Costco’s site lists only the 4th generation iPod Touch for sale on their site and only at a slight discount. Competitors may not always be able to ship directly to the customer (as in the case of Walmart and the iPad), but at least the products are prominently displayed on the site.
In the long run will the average Costco consumer even realize that Apple products are no longer available from the warehouse? It’s doubtful that the move will have an impact on either company.
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