Costco’s personalized recommendations drive nearly $500 million in digital sales

Costco’s personalized recommendation carousels are no longer a nice-to-have feature tucked inside the app. They helped drive just under $500 million in digital sales in the quarter ended May 10, and Costco said those carousels converted at roughly three times its typical rate, a sign that recommendation engines are becoming revenue infrastructure, not window dressing.

That matters far beyond warehouse retail. For gift sellers, the lesson is practical: shoppers under pressure do not want a beautiful maze of options, they want fast, decision-ready paths. Costco’s model points to the kinds of prompts that can move the needle, including recipient-based sorting, occasion-led carousels and bundles organized by speed, whether the need is same-day pickup, two-day shipping or a personalized item that still arrives on time. The point is not more choice. It is better sequence.

Costco Wholesale Corporation, based in Issaquah, Washington, said digitally enabled comparable sales rose 21.5% in the quarter, reinforcing that the recommendation system is part of a broader digital habit shift. CFO Gary Millerchip said the carousels generated about $470 million in the prior quarter as well, suggesting the lift has held for at least two straight periods rather than spiking for one reporting cycle. That kind of consistency is what turns personalization from a merchandising trick into a measurable sales engine.

The quarter was strong across the business. Costco reported net sales of $69.15 billion, up 11.6% year over year, and net income of $2.192 billion, up 15%. Membership fee income rose 10.7% to $1.37 billion, paid executive memberships reached 41.2 million and total paid members hit 82.9 million. Costco also said a little more than one-quarter of membership income growth came from the September 2024 fee increase in the United States and Canada, underscoring how much of the company’s momentum still rests on scale as well as software.

Costco’s digital push in the quarter also included digital membership card access, mobile wallet improvements, expanded cake ordering through the Costco app and an international rollout of a shopping cart pre-scan tool. Together, those changes show the same strategy in different forms: reduce friction, surface the right item sooner and keep the customer moving. For gift retailers, that is the blueprint worth copying, because the fastest route to a thoughtful purchase is often the most personalized one.