Kawasaki Tests Costco Sales Program

01/04/2011 @ 2:28 pm, by Jensen Beeler15 COMMENTS

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

  • Doctor Jelly

    I do love my Costco! Apple gets the finger and Kawi gets embraced!

    36 pack of toilet paper? Check. 4 pack of pizza? Check. 5 pack of ZX10R? Yeah!

    If the system proves successful, wonder how long it’ll take before we have Kirkland branded bikes…?

  • Shaitan

    Craziness, but whatever improves moto sales and also public excitement/exposure.

  • Tom

    Why not? Costco sells Porsches in Mexico. If Kawasaki can increase sales, good for them.

  • 76

    I think exposure like that is awesome for Kawasaki. Bikes are infectious, the more they get in front of people in a setting like that the better.

  • Sean in Oz

    Expect a flood of second hand zx10r parts.

  • Ken

    I love Costco and I am not over weight.
    I wish this would be available on the east coast so I could buy a bike thru Costco .I bought my latest car thru Costco and had a great experience.

  • TomC

    I bet the local dealers are thrilled. Wonder what kind of break Costo will give on parts and service.

  • The dealers are thrilled, they get the sale. Costco is basically supplying them with leads, not handling the actual sale, the parts, or the service.

  • TomC…the participating dealers are also offering 20% off P&S. A bike purchase is not required

  • bruce armstrong

    Porsche tried this twenty years ago…..they were going to sell the cars and let the dealers service them……there was a revolution — dealers protecting their franchise agreements. Don’t expect to see this in California were dealer franchise laws are ‘in stone’ …. Bruce

  • cory

    There is no discount on service but you can get 20% parts, accessories and appearal just for being a Costco member!

  • jim

    Bruce…this is where the confusion often evidences itself.Note Jensons comment at 9:37
    Costco refers the Member to the dlr. Costco is not a broker. The dlr conducts all sales aspects…walk around, features and benefits, financing, warranty submission and delivery.
    There are no franchise issues involved.
    Costco is not selling the units – Costco is displaying them to promote the referral to the dlr…Costco only displays in whse’s in a dlrs PMA.
    The display is to inform the Member that such an association w/ a participating dlr exists.

  • MikeD

    How is it that i goes ?…. There’s no such thing as TOO MUCH or BAD PUBLICITY ? , Someone correct me if im wrong. lol. If it helps Big KHI on improving sales on the U.S.A….HEY, nothing wrong with that.

  • Singletrack

    But what does Costco and Affinity get out of it? If the dealer gets the sale Kawi must be paying Costco for every lead/sale. Costco’s not doing it out of the goodness of their heart.

    This goes along with the current big box mentality that dealers offer little to no value. Motorcycles (like computers) are pretty much disposable anyway. If you crash it, or it breaks, buy a new one because it’s too expensive to repair.

  • Keep in mind these bikes are not on isle 11. Notice that you have to call a 1-800 number to get the information of a local dealership. This is nothing more than Kawi paying advertising fees to Costco, and that’s what Costco is getting out of the deal. In most aspects, it is similar to a sponsorship.

    I think it’s a smart move by Kawasaki. That have slowly been targeting big (or at least popular) businesses and getting exposure from them. BMW has the Ca Superbike school and Kawasaki now has…well, Costco.