AI search is becoming an increasingly valuable traffic source for Costco. During Costco’s fourth-quarter earnings call, CFO Gary Millerchip revealed that traffic to the company’s website from AI searches had grown by triple digits for the second consecutive quarter. AI search traffic also has the highest conversion rate of any source of traffic to Costco’s website.
Improving Digital Capabilities for a Shifting Members Base
Costco’s evolving digital strategy reflects more than the growing use of AI. The company is also adapting to changes in its membership base.
According to the same earnings call, CEO Ron Vachris said members under 40 now account for more than a quarter of Costco’s membership base.
A shifting base and the widespread use of AI combine to make it so that Costco now has more younger members than ever.
The rise in a younger member base has driven Costco to improve its digital capabilities on all fronts. Whether it’s partnering with third-party delivery providers or cleaning up its data using AI, Costco is making strides to become more digital friendly.
According to Millerchip, Millerchip said AI-driven searches most commonly lead to sales of appliances and consumer electronics.
“Interestingly, the Costco membership is also among the top items originated from AI searches, indicating that there is a strong positive sentiment around the value of our membership coming from these sources,” said Millerchip.
Despite Costco spending no money on digital advertising, the company is faring well online thanks to AI search and its own members speaking positively about the brand online on social media.
Despite Costco’s desires to ramp up AI use and improve its digital capabilities, the company is still drawing some lines on what it is and is not interested in. In its recent earnings call Millerchip said, “we are excited about the opportunity with AI, particularly I don’t know if I would say agentic commerce at the moment.”
What This Means for the Traditional Experience
Costco is expanding and improving the way it works online but that doesn’t mean it doesn’t want members visiting its warehouses anymore.
Costco still wants the traditional experience to be something members look forward to. Costco’s well-known “treasure hunt” shopping experience remains central to its warehouse model, even as the company expands its digital offerings.
In 2026 Costco opened up 28 new warehouses, including 3 relocations, netting the company a total of 25 new warehouses.
12 of these 28 were opened during Costco’s fourth quarter. Of the 12, 10 were U.S. buildings, one a Taiwan relocation, and the other was Mexico’s 43rd warehouse.
That brings Costco’s total warehouse count worldwide to 939.
According to Vachris, the company plans to open another 33 locations in 2027, five of which are relocations. The company will keep opening new locations with the intent of hitting its goal of 30 net new warehouses per year.
