Costco will be joining its competitors like Walmart and Target as the wholesale retailer begins selling customers' purchase history to advertisers.
According to Marketing Brew, Costco is posing to sell loyalty membership data of 74.5 million household customers to marketing firms to build targeted ads.
Mark Williamson, Costco's retail media assistant vice president, touted the new revenue venture as a way to help customers "reach the right members in the right context based on past behavior."
According to Williamson, the targeted ads will particularly benefit regular customers by tracking products and brands they usually buy.
Costco's Targeted Ads Opens New Customer Risks
While Costco presents its decision to share customer data with third-party vendors as a way to improve people's shopping experience, the venture also entails new risks to customers.
In 2018, Walmart's jewelry product partner MBM Company exposed over 1.3 million customer data in the publicly accessible Amazon Simple Storage Service.
A subsequent investigation revealed that the data leak included customers' credit card details, passwords, mailing lists, promo codes, and item orders since 2000.
Although Costco may be doing the same strategy, a Dataconomy report indicates that the retailer will only be selling aggregated and anonymized purchasing info to prevent compromising customers' privacy.
This is in addition to an opt-out option Costco will offer hesitant customers to share their data with other companies.
Costco Selling Data to Advertisers: Why Now?
Costco's latest move marks the retail industry's new step to capitalize on customer shopping data amid growing operational expenses and regulatory crackdowns.
With the rise in demand for advertising data, the venture became one of the most profitable ventures for many customer service platforms as it costs little investment but offers huge returns.
Costco estimated that the company's revenues could become "quadruple or more" by "unlocking the power of the data that we have."
