Costco Wholesale Corporation (COST) shares rose 0.22% to $924.83 as the membership warehouse retailer accelerated its digital expansion, with digitally enabled sales surpassing $33 billion and growing more than 20% during its latest fiscal year. The momentum comes as Costco shut down its Costco Next marketplace and refocused online activity on its main website and mobile application. For a retailer long defined by its warehouse clubs, a digital business of that scale makes the online channel an increasingly significant part of its growth.

Delivery Partnerships Widen Digital Reach

Costco has stepped up online investment while keeping its warehouse membership model at the core of its operations, relying on outside delivery partners to extend access without building every service in-house. That approach — a pattern common across established retailers that tap third-party delivery platforms rather than build their own logistics networks — has supported stronger digital sales and broader engagement.

The retailer expanded its Uber Eats partnership from 17 states to the entire United States and broadened its relationship with DoorDash, while Instacart continues serving members in the United States and Canada. Together, these partnerships give members more delivery options and extend Costco's reach beyond physical warehouse visits.

Digital activity also climbed across Costco's website and mobile application during the fourth quarter, with site and app traffic rising 30% as the company refined personalized product placements and email communications. Personalized initiatives generated triple-digit sales growth during the period.

Costco Next Closure Reshapes Online Product Strategy

Costco closed Costco Next in September after operating the marketplace since 2017. The service gave members access to selected products that Costco did not regularly stock in warehouses, with vendors shipping purchases directly and handling returns for their products. Discounts reached 40% across categories including electronics, luggage, and home goods.

Unlike Amazon's large open marketplace, Costco kept the platform tightly curated. The pullback also runs against a broader e-commerce trend in which many large retailers have expanded third-party marketplaces in recent years. Management later changed direction as the company's main digital channels became more capable, and Costco now plans to integrate popular Costco Next products directly into Costco.com and its application. The company expects the move to simplify shopping and support sales through its established online channels. How quickly those products appear on Costco.com and in the app will offer a window into how the consolidation unfolds. Management also said the marketplace closure would not materially affect Costco's financial results.

Personalization and AI Search Support Online Growth

Costco continues to improve its digital merchandising as more members use its online services. About 10% of Costco.com orders now include at least one personalized product, helping the company connect members with relevant merchandise through its existing digital platforms. Retailers across e-commerce have been leaning on personalization and AI-driven search to lift engagement, and Costco's figures offer a look at how those techniques perform at scale.

Traffic from AI search tools also increased at a triple-digit rate for a second consecutive quarter, and Costco said those visits produced the highest conversion rate among all website traffic sources. AI search nonetheless remains a smaller traffic source than the retailer's established digital channels, and how that channel scales from its smaller base will be a figure to follow as future quarterly results are reported.

The company continues combining delivery, personalization, and digital product discovery with its warehouse model. Closing Costco Next concentrates more activity inside Costco's primary website and mobile application, and as digital sales expand, the retailer is simplifying online access while preserving its membership-focused retail structure.