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Tuesday, January 30, 2007

Costco on coupons: It's not a bait-and-switch

For what it's worth, Sunday's rant about the unavailability of coupon-discounted items at our local Costco warehouse has been responded to by a staffer at the warehouse chain's Northwest regional office. Here it is:

We apologize for being out of stock on the Huggies Baby Wipes and the Western Digital Hard drive. The warehouse should have offered you a rain check. It sounds like it was not handled properly. Please let me know which warehouse you shop at and I will let you know when the warehouse will receive the product. I will also make sure you get a rain check.

The wipes and the hard drive should be in the warehouses by the end of the week. We had under projected on the quantities needed for the wipes and the vendor only shipped us 1/2 the quantities projected on the hard drive. We know you don't want excuses, you just want the product in stock when you shop. It is not a case of bait and switch. The vendor covers the coupon discount so it's to our advantage to maximize sales on the coupon items. We don't want to be out of stock! Thank you for your comments and again we apologize for the inconvenience.

Gary Giacomi
Costco Wholesale
Vice President, GMM Non-Foods
NW Regional Office
Phone: 425.313.8380
Fax: (425) 313-8445

It's going to be hard to make the diapers-and-wipes thing work. We already bought a supply of the diapers, and a supply of a different brand of wipes, and the user of those items in our house is almost through needing them. I may go for the hard drive, but I've been warned by a commenter on Sunday's post that that particular model doesn't have a good performance record.

Anyway, Costco has responded. I still give them an 8.

Comments (13)

Good response, though.

It is a fair response to a legitimate complaint. And it should help you to grasp the reach of your blog. They're watching, everywhere. Expect your subpoena from the White House any day now. You may have dissed the veep one too many times.

All in all, a much more responsive entity than government, wouldn't you say?

it should help you to grasp the reach of your blog.

Actually, I sent Costco a link to the blog post in one of their member comment forms. So they didn't find the post themselves.

My story from Costco this week: went in with a $3 coupon for Jenny-O Turkey Burgers....they were out of the burgers. When I was going through checkout, they asked if I had any coupons. I told them only for the burgers that were not in stock, showed her the $3 coupon. She promptly took $5 off the price of a package of steaks I was buying.

A reader wrote back to the Costco guy, and sent me a copy. Here's part of what the reader said:

Nice spin in your mail to Jack Bogdanski. But it is all spin. Tigard Costco has you go through three levels of managers before anyone admits that Costco does issue a rain check. In my opinion, it is a corporate policy designed to minimize the revenue hit from folks using coupons. I hope you read all the complaints on the Bogdanski web blog about nonavailable items. There was a lot more than Jack and diapers and wipes. ... no CO detectors or puck lights in stock at Tigard.... Bill Holmer can't get Turbo Tax at another Costco with the coupon; John Doe "Mike" cant get the diapers and wipes at another Costco until and unless he goes back twice.

This pattern is as bad as the former PayLess Drugs before it was taken over by RiteAid.

Far too many instances on far too many products to be co-incidental, and the routine denial by Costco employees of the existence of any "rain check policy" says that either Costco employees are abysmally trained by a very ineffective management, or there is an active corporate policy to NOT ISSUE rain checks so as to maximize revenue.

If I wanted to have some fun, I'd call the Financial Fraud section of the Oregon Department of Justice and file a complaint as to Costco.

I'd love to hear your response.

Oh, dear.

Any proposals for competitors to Costco, besides Wal-Mart which is apparently still big box non grata? Freddy Krogers?

To restate and expand on my earlier post, a Costco promotion can be wildly successful and exceed a manufacturer's best guesstimate of how much of the uniquely packaged sku to build. Excess inventory is usually not saleable to another retailer (it's built especially for Costco), so "leftovers" are not a prudent business strategy for the manufacturer. When faced with an out-of-stock, a manufacturer goes back to the well and orders additional packaging, obtains components from all over the globe, shuffles production schedules, etc., etc. Don't misunderstand, it's a challenge we relish (and are usually successful)! Seasonal goods and dated promotional goods are especially difficult to restock in a timely manner for these reasons. And, as the Costco representative explained, it's the manufacturer who absorbs the promotional discount - so it's in Costco's best interest to have plenty of the item in stock. Costco takes "the revenue hit" when the product is out of stock, not by short-ordering.

Chill, people. Not every company is out to get you.

No, but they screwed up here, and they wasted a lot of my time. And I'm far from the only one.

Additionally, their rain check policy is murky at best.

I have no doubt that they hate rain checks -- not because they lose the coupon discount (I believe them, that the manufacturer eats that), but rather because it gets too much human interaction involved. Costco is a success because it's eliminated most of the human element from customer transactions. Screwing around with rain checks creates far too many transaction costs.


If you were a true cheapskate, you wouldn't have wasted so much time trying to save that 4 bucks, or whatever it was. Plus, a real cheapskate would know to get a raincheck the first time - wouldn't leave the store without one. Get a grip!

Y'know, it's amateurs like you that give us professional cheapskates a bad name.

The guilt lies solely with you.

I sentence you to clipping coupons while watching QVC for 1 hour.


It was 23 dollars.

Cosco failed on this, and they did it badly. At least they thought enough to respond.

I'm happy to say that a murky rain check policy is not a problem where I work. How ever if you can't find a product in the store, ask for an alternate item for the sale.

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