– Case Study –

SPS Commerce & Costco: A Network Success Story

  • Customer Type:
  • Industry:
  • Headquarters:
    Issaquah, WA
  • Retail channels:
    Stores, E-Commerce
  • SPS Product(s):
    Community, Fulfillment
  • Network Member Since:

Executive Summary

With more than 600 warehouse stores throughout the world, Costco is known for carrying quality, brand-name merchandise at substantially lower prices than its competitors. The company limits its SKU count at stores and has an average of 10,000 vendors at any time. Costco’s vendor base is changing constantly as it finds new and unique products for its business and consumer customers. It has large vendors, such as P&G, but many are small or medium-size companies and/or vendors that Costco leverages for one-time purchases.


The Challenge:

Improve vendor compliance.


The Solution:

SPS Commerce’s straightforward, easy and seamless approach.


The Results:

Costco has successful onboarded many vendors since 2003.

Teaming with SPS Commerce

In 2003, Costco teamed with SPS Commerce and launched the first of many Community development programs. Costco requires EDI of its vendors but does not mandate the practice. Thus, vendor compliance can be challenging. SPS Commerce’s straightforward, easy and seamless approach has helped Costco onboard many vendors throughout the years.

Realizing New Efficiencies

SPS offers a variety of Community development program options for retailers like Costco:

Tier I makes it easy for larger vendors to quickly test their existing EDI/XML or product data with back-end systems.

Tier II & III extends an existing integration platform to small and mid-sized enterprises.

Multiple order management models extend an existing integration platform across multiple order management models, including Ship to Store, Ship to Consumer, Ship to Distribution Center, Vendor-Managed Inventory and Private Label.

Deeper integration extends integration by enabling vendors to support additional EDI or XML documents or fulfillment models.

Ad-hoc enablement exists for new suppliers that need to be onboarded on an individual basis.

“SPS saves my staff time and work,” said Reed. “It is nice to have an organization that handles the cold calls in to our vendors, finds the right contact to speak to and handles the testing process. When a vendor comes to Costco after working with SPS Commerce, they are truly ready to go, and we can both start to receive the benefits right away. This saves us a lot of time and labor.”

Misti Reed“Costco’s vendors are positive about SPS Commerce’s Community development process and team. Suppliers are trying to comply with our requests, often realizing that technology is changing and they need to change as well.”
– Misti Reed, EDI Supervisor, Costco

Supply Chain Vision

“We have built a great relationship with SPS Commerce over the years,” stated Reed. “They are willing to work with us and do the right thing. SPS Commerce seeks to not just close today’s sale, but also to build a long-term relationship. That’s what is so great about their month-to-month contracts. They are constantly proving themselves and offering the best service to their customers.”

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Related Content:

Learn more about vendor onboarding programs from SPS Commerce.