Wholesale discounter Costco might be one of the great staples of free-market capitalism, allowing Americans to buy beef jerky in convenient seven gallon portions throughout the seasons (because you need that much jerky in your diet America). Steadfast to the rule that more must be better, it excites us to find out that Kawasaki has been testing a program since November with Costco, which sees the Japanese bike maker selling its motorcycles through 15 Southern California Costco warehouse stores. Taking place in Los Angeles, Orange, and San Diego counties, several Kawasaki dealerships have been working with local Costco stores on the pilot grogram, which includes having a Kawasaki motorcycle on display (starting with Team Green’s KX dirt bikes) at the Costco stores, along with other promotional materials.
The pilot program, which is being setup by Affinity Development for the Costco Auto Program (you’ve seen their work if you’ve noticed a car from a local dealer on display outside the Costco entrance), is the end result of over four years of effort by Affinity in enticing established motorcycle OEMs to try alternate points-of-sale besides the dealer’s showroom.
Despite Team Green being the only OEM to consider trying the program, there still seems to be ample push-back from Kawasaki on letting the program go full-bore. For instance, should a Costco member be interested in purchasing a motorcycle, they would have to call a number that would then refer them to their closest Kawasaki dealership.
Once the customer goes to the dealer, they flash their Costco membership card, and are given a pre-determined reduced price on their Kawasaki motorcycle purchase. Costco is helping lubricate the deal by offering a $250 Costco cash card to buyers if they fill out some additional paperwork. Kawasaki dealers are also offering a 20% discount on parts, accessories, and apparel to help sweeten the sale.
While the process still seems a bit convoluted and needs some streamlining, the selling potential for Kawasaki could be huge with this program going nationwide. Costco’s Auto Program has already proven itself to be a boon with car and boat sales. Boat maker Sea Ray has been partnering with Costco for over a year now, and seen over $120 million in sales in that timeframe (50% of sales were reportedly by people not in the market for a boat, with an additional 22.5% in the market only for another brand).
Similar success has been seen with Volvo, who has used Costo warehouses extensively for automobile sales, with the warehouse store accounting for 40% of models sales on specifically promoted cars. The key to this success is not only the high volume of traffic that goes through Costco’s doors, but also the company’s up-market and affluent demographic, which sees a $102,000 year median income in its membership.
Kawasaki is set to evaluate the program’s success at the end of this month, and at that point will make a decision as to whether to try and roll the program out nationwide. Initial dealer responses seem to be positive, and we imagine that with further refinement to the buying process, the number of additional sales could greatly be expanded upon.
The idea of using chain brand mega-stores is not a new one to the motorcycle industry, as we’ve already seen the concept used as a core component to Brammo Inc.’s initial sales strategy, which used several Best Buy locations on the west coast as its point-of-sale. The real power of chains like Costco and Best Buy resides in the fact that not only do a lot of consumers enter these stores’ doors everyday, but because they are mainstream brands, it means that manufacturers will get an opportunity to have non-motorcyclists thinking about a motorcycle purchase. Hopefully Kawasaki will stop thinking like a traditionally stodgy Japanese manufacturer, and see the value in this outside-of-the-box thinking, and how it could not only bolster sales, but indoctrinate new buyers into the motorcycle market.
Source: Dealer News