Amazon vs. Costco: Which One Is Cheaper?

Conventional retail wisdom states that you'll save big if you buy in bulk. That kind of thinking has made Costco a prominent retail success story even as many brick-and-mortar competitors have faltered in the face of stiff online competition.

But is trekking to Costco for mega quantities of paper towels and sandwich bags worth it when you can buy many of the same products on Amazon with the click of a mouse? We at Cheapism have decided to find out just what kind of savings we're talking. We analyzed Amazon and Costco prices on 100 items across four areas: household staples, baby and pet, beauty and toiletries, and health. We did an apples-to-apples comparison, pricing the same product at both retailers. Amazon items had to be shipped and sold by Amazon itself, not a third-party seller, and Costco's prices were obtained in-store, not on Costco.com.

The winner: Costco by a landslide

If you had any doubts about whether that $60 Costco membership is worth it, let us put them to rest. On most of the products we surveyed, Costco was cheaper -- and many times, way cheaper. Here are our findings in a nutshell:

• Costco was the better bet almost 80 percent of the time The warehouse club beat Amazon’s per-unit pricing on 79 of the 100 products we researched -- 22 household staples, 18 baby and pet items, 19 beauty and toiletry products, and 20 health items. Amazon undercut Costco only twice on household staples, six times on baby and pet goods, three times in beauty and toiletries, and three times in health, for a total of 14 times. The retailers basically tied seven times.
• Savings with Costco were greatest in the household staples category That’s where the savings averaged 25.4 percent. Costco was 23.4 percent cheaper on baby and pet items, 21.4 percent cheaper for beauty products and toiletries, and 21.6 percent cheaper for health items.
• Savings were impressive on several items On three products, Costco was more than 50 percent cheaper than Amazon per unit. That means more than 61 percent savings per tablet on Bayer Aspirin, more than 58 percent per treat on Blue Dog Bakery dog treats, and over 51 percent savings per ounce on Arm & Hammer liquid laundry detergent. On 17 other items, Costco offered savings of at least 30 percent.
• When Amazon did beat Costco, it was by a slim margin Amazon was cheaper on 14 items, but the average savings were in the single digits -- nearly 6.6 percent savings for Amazon’s winning items compared with 23 percent for Costco’s. The single best deal we saw on Amazon? Savings of 14.36 percent per diaper on Huggies Little Snugglers, size 1, over Costco.

The savings are more impressive considering we examined products many households order multiple times a year. For instance, you may buy a 26-ounce four pack of Sensodyne Pronamel Toothpaste for $21.99 that will last an entire year, or a single 8-ounce tube of the same toothpaste on Amazon for $9.84 three times a year. You'll pay almost $30 on Amazon -- and end up with less toothpaste than you would have gotten at Costco.

Why Amazon is still a worthy competitor

So it's a no-brainer, right? Buy all your goods at Costco and reap long-term savings? The numbers are compelling, but there are still reasons Amazon can make more sense for some shoppers.

Time is money

Ordering household staples on Amazon is a lot less time-consuming than spending an afternoon in the aisles at Costco. And if you live in a rural area where Costco is hundreds of miles away, Amazon's prices will probably look a lot more reasonable (though as we note in our previous price comparison between Amazon, Walmart.com and Jet.com, Walmart and Amazon are often neck and neck on prices -- and Walmart offers a simpler online shopping experience that even includes free two-day shipping without a membership).

Costco may limit quantities on popular items

Costco often prohibits customers from buying more than a couple of items at a time, most often when it puts items on sale. For instance, a $4.40 Costco discount on 30 rolls of Charmin Ultra Soft Toilet Paper resulted in an impressive 41.67 percent savings per square foot over Amazon, but customers are limited to two packs. Quantity limits aren't as common on Amazon.

Costco can be an impulse buyer's worst nightmare

As the Consumerist notes, the store strategically places "trigger items" -- those are items nearly everyone needs, like cereal or paper towels -- all over the store, making it hard to get the items you need without passing a lot of potential impulse buys. And since the store is constantly cycling in different items, buyers may feel like it's now or never, and end up with a cart full of goods that weren't on their shopping list. In contrast, e-commerce retailers like Amazon still lag when it comes to impulse buying: 68 percent of impulse buys happen in a brick-and-mortar store, like Costco according to a recent CreditCards.com survey.

Costco's selection is limited

Costco is able to offer low prices in part because it keeps its inventory streamlined. The average store offers fewer than 4,000 items to choose from, according to The Motley Fool. If you're looking for paper towels, you'll probably be choosing from one or two big name brands (Bounty, for instance), and Costco's store brand, Kirkland Signature. In contrast, Amazon has nearly 400 million products, according to ScrapeHero, including nearly 61 million in the home and kitchen category alone. As for paper towels, you can choose from Bounty, Viva, Sparkle, Scott, Brawny, Seventh Generation, and dozens of brands you've never heard of. (You can even find Kirkland merchandise on Amazon, though usually at a healthy markup over what you'd pay at Costco.) Moral of the story: If you want variety, Amazon is a much better bet.

Buying in bulk may not always make sense

Repeat after us: Buying 250 ounces of laundry detergent, no matter how cheap, may not be a good move if you're single and do little laundry, or don't have the room to store a massive bottle. Amazon offers a wider range of quantities on popular items -- in fact, you may be able to buy the same smaller bottle of detergent you'd pick up at your local big-box store using the Amazon Prime Pantry program, which makes it more cost-effective for the site to ship smaller items. The catch? You need to be a Prime member, and you have to select five Pantry items to nab free shipping.

The bottom line: shop Costco for savings, use Amazon for a dash of convenience

The numbers don't lie: You really can save big with Costco. But buying everything in bulk may not be to every shopper's advantage. That, combined with the convenience and variety Amazon offers, means the online retail giant will probably stay firmly entrenched in any shopper's arsenal.

PRICE COMPARISON*

Household Staples

Baby & Pet

Beauty/Toiletries

Health

_{*Prices obtained Aug. 9-12, 2017 in store at Costco and online at Amazon. Amazon items all shipped and sold from Amazon, not third-party sellers.}

To account for differences in quantities, we calculated per-unit prices and examined the difference between them. All applicable in-store discounts and rebates at Costco were considered, as were online coupons at Amazon. (We did not consider discounts Amazon offers as part of its Subscribe and Save program, as this requires a long-term commitment from the buyer, but we did include items from Prime Pantry, which requires an Amazon Prime membership.)

Editor’s note:This item has been updated to correct the data regarding Always Ultra Thin Regular Pads (with wings), which had been previously been listed as cheaper on Amazon. Other figures impacted by this change have been adjusted as well.