How smart is’s decision to delist Costco’s Kirkland brand?

Jun 14, 2017
George Anderson

Walmart apparently has no problem selling’s Echo and Fire devices on its website, but the company has to draw the line when it comes to allowing its business to sell Costco’s Kirkland private label. spokesperson Meredith Klein confirmed that the site is phasing out the sale of Kirkland products, according to a Bloomberg report, although some third-parties on its marketplace may carry items from Costco’s line. Searches on the Jet site and turned up multiple pages of results for Kirkland-branded products across a variety of categories.

Jet’s phasing out of Kirkland sales are backed up by numbers from Slice Intelligence, which saw the site’s share of the brand’s online sales fall from 10.9 percent in December to 2.2 percent in May. Only Amazon, which had a 41.7 percent share of Kirkland sales last month, Costco (31.5 percent) and Google Shop (22.8 percent), have a higher percentage of the brand’s sales online.

To replace Kirkland, Jet is shifting its focus to Member’s Mark, the private label of sister company Sam’s Club. Member’s Mark represents about $10 billion in sales for Sam’s and is a central focus of efforts to grow its business. Sam’s has announced plans to introduce 300 new Member’s Mark items this year with a similar number of rollouts scheduled for 2018. Among the new items are sea salt caramels, wines and Fair Trade certified coffee in K-Cups.

“In the past we made sure we were competitive with national brands,” said Chandra Holt, senior vice president of merchandising for Sam’s, in April. “But in today’s environment, a lot of our members want better than that. Our goal is to make sure every Member’s Mark item is developed based on what our members want today.”

DISCUSSION QUESTION: Has selling products created by competitors such as Amazon and Costco become a reality of retailing today? How will the decision by to phase out sales of Costco’s Kirkland brand affect each company?

"At some point you have to ask where the line is, because it gets blurrier every day."
"It is madness for a retailer to sell another retailer’s private label products, under any circumstance."
"This is a sensible move. Whether to sell competitors' products depends heavily on context. "

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16 Comments on "How smart is’s decision to delist Costco’s Kirkland brand?"

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Jon Polin

While the gloves have come off between retailer and CPG in the past few years, as evidenced by widespread promotion of white label products (retailers didn’t used to promote white label so as not to upset their CPG suppliers), retailers do still need to draw a line before selling competitors’ white label products. Walmart delisting Costco private label is the right move. Their next move should be to stop selling Amazon Echo and other Amazon products that are enablers of more sales on Amazon.

Keith Anderson

This is a sensible move. Whether to sell competitors’ products depends heavily on context.

Is the competitor’s product the category leader (as in the case of Amazon’s Echo and Kindle devices)? If so, declining to sell competitors’ brands can mean essentially opting out of those categories or significantly disappointing shoppers. On the other hand, if you can offer meaningful choice without the competitor’s brand — no problem.

Secondly, do you have your own competing brand or product that you’re incentivized to support? In the case of Member’s Mark, the answer is yes.

As the retail value chain continues to blur, with retailers masquerading as manufacturers and marketplaces and manufacturers masquerading as retailers, a degree of “co-opetition” is inevitable. But there are many reasonable exceptions.

Max Goldberg

In the age of online shopping, it’s hard to erect walls and still try to achieve superstore status. In the brick-and-mortar world things can work differently. Sam’s Club doesn’t sell Costco. But does not operate in that world. Consumers who want Kirkland products will buy them somewhere else, and the hit to Costco’s bottom line will be minimal.

Steve Montgomery

Jet’s/Walmart’s decision to phase out the Kirkland brand involves not selling the products of a direct competitor. This is a very logical decision (although it may negatively impact their bottom line). This is not exactly the same as retailers facing the decision of whether or not to sell Amazon’s Echo products which may in turn direct purchasers of the device to the retailer’s competitors.

Ben Zifkin

You can use whichever phrase you like but retail has always been about “co-opetition” or “frenemies.” The gloves come off, however, at private label. That is a battle ground.

Jet (and Walmart) clearly have a strategy around going after this area of business and it will be interesting to see how that strategy plays out.

Nikki Baird

It’s funny to consider this question today, when rumors are flying that Amazon is going to start carrying IKEA products. At some point you have to ask where the line is, because it gets blurrier every day. Selling Amazon Echos, using Amazon Web Services, carrying Costco’s private label brand. I guess it comes down to doing what makes customers happy while also delivering the best margin to you. If you can do that without competitors’ products, great. And if you can’t, you better find a way to do it WITH competitors’ products.

Richard J. George, Ph.D.

I’m not entirely convinced that excluding competitor offerings makes strategic or financial sense. However if you are going to do it, be consistent.

Celeste C. Giampetro

I agree with you. I’m not entirely convinced either. Although consider Trader Joe’s which primarily sells its own brands with very few exceptions. And Whole Foods which has introduced its own line in addition to a select few brands.

In the case of Jet, it sounds like Walmart is integrating the brand into its other house brands. May work out, may not. If Jet has been successful to date, why disrupt the model? Integrating the brand into Walmart may turn out to be a disaster as it may stifle innovation.

Kai Clarke

This is a smart move for Jet. Supporting your own (Walmart) brand over that of any other brand, including those manufactured by your competitors, should come first. However, it is also important that your own house brand is market competitive, since making money is still the most important part of every business.

Ryan Mathews

I agree with Max and Nikki. Retailing in the 21st century — across platforms — is qualitatively different than it was a decade or two ago, and pretending it isn’t is just going to lose you sales and customers.

Kirkland products have to meet high standards. I have had several leading branded product clients who couldn’t pack food products to the Costco specs which were higher than their own. So without telling tales, if I want to purchase certain products I do want Kirkland because my own experience tells me the quality will exceed that of competitive branded products. The fact that they are cheaper is just a bonus. is an online market and, if it is going to be effective, it has to allow me as a customer to access the best products — regardless of who makes them. Should Walmart sell Costco products in their stores? That’s another question. But online — it ought to be a no-brainer.

Ricardo Belmar

Offering competitor products should become a pure business decision based on sales figures. If your competitor’s product in a given category outperforms your own private label product in sales and customers consider the other brand’s product the category leader, then you may not have a choice but to sell it, or risk losing those customers.This is where understanding your customer lifetime value becomes important because you need to know what those customers are worth to you long-term to determine if it’s okay to disappoint them. Otherwise they will take a greater portion of sales with them because of that one category you no longer provide.

George Anderson

As Slice Intelligence’s data points out, Amazon and the third-party sellers on its site are clearly not concerned about selling Costco’s or Walmart’s products. Amazon actually sells more Kirkland product than Costco online. Searches on Amazon also show up plenty results for not only the Kirkland brand but Member’s Mark, as well.

Ben Ball

If Walmart/Sam’s is truly serious about offering superior products with Member’s Mark, they are missing a heck of an opportunity here! Like many here, I am a complete Costco/Kirkland convert. I would never try a Member’s Mark branded product — even if the description or price of that product could tempt me to — because I will never see it.

So! If Sam’s Club wants to tempt me with competitive Member’s Mark offerings that are now as good as, or better than both national brands and Kirkland, why not merchandise them on the website right next to the comparable Kirkland product? Offer me an incentive to try the Member’s Mark brand when I put the Kirkland item in my shopping cart. That’s competitive marketing strategy!

Phil Kotler would be ashamed.

Ken Cassar

It is madness for a retailer to sell another retailer’s private label products, under any circumstance. In the case of Kirkland products, consumers are going to figure out eventually that it’s a Costco product and potentially join the club to get more great Kirkland products. In the case of Amazon’s Echo, retailers that sell that product are aiding and abetting the one company that is most likely to put them out of business. It is insane to help Amazon showcase its products in a physical environment. Let Amazon spend the money to build stores to show off its products. A lack of physical presence is Amazon’s only Achilles’ heel right now.

William Hogben

Without the context of their negotiations it’s impossible to say.

Peter Charness

Shades of gray indeed. If the consensus is not to give Jet private label, then if retailers want to stop Amazon from eating their lunch, why on earth would they sell anything at all on the Amazon site? Yes the retailer (Private Label or Brand Owner) gets some sales and margin, but they are just making Amazon bigger and stronger and more able to crush them in the mid term.

"At some point you have to ask where the line is, because it gets blurrier every day."
"It is madness for a retailer to sell another retailer’s private label products, under any circumstance."
"This is a sensible move. Whether to sell competitors' products depends heavily on context. "

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