Costco was immune to the Amazon threat because Costco “has built one of the most powerful retail models in the world on compelling merchandising and pricing and the strength of its substantial membership revenue. According to Investopedia, membership fees in 2016 accounted for $2.6 billion in Costco's revenue. In addition to the retail model and recurring membership fees, Kirkland's brand loyalty, which earns high ratings among both consumers and critics, helps defend Costco from lost consumers. Even though Amazon bought Whole Foods and now has a physical presence, it still has a lot of work to do before it becomes a real threat to Costco. Costco shoppers value the Costco experience and wholesaler discounts, which Amazon and Whole Foods will have a hard time legitimately competing with, especially since a large percentage of Amazon shoppers prefer to stay out of a physical store. Unless Amazon can find a way to attract the Costco shopper, Costco will continue to be immune to the Amazon threat in the future. Costco's notable strengths that make it almost Amazon-proof are its subscriptions and its simplicity. First, because membership fees account for 75% of the company's earnings, Costco has the ability to charge very low prices. (Petro, 2016) Second, by keeping its selection relatively small, Costco streamlines the supply chain and increases the retailer's purchasing power. One of Costco's major weaknesses is their e-commerce site. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay I'm not sure Costco needs to react to Amazon's threat, other than refine what it is currently doing. According to CNN Business reporter Nathaniel Meyersohn, since subscriptions are the main driving force for Costco, subscription renewals in June 2018 were about 90%. That 90% rate of return is a great indicator of how Costco is faring in the war with Amazon. “Costco has successfully defended itself from the Amazon threat through low prices, offering fresh food and gas, and creating a treasure hunt shopping experience that can't be copied online. ” In addition to creating a more competitive website, to leapfrog competitors on the e-commerce side, Costco could implement other incentives to drive consumers to the existing website. They may offer online-only discounts or cash-back incentives for all orders placed through Costco. com. Additionally, Costco could implement a quick pickup or delivery service for online orders, like those adopted by Walmart and Target. Amazon's recent purchase of Whole Foods could potentially threaten Costco in the future. For one thing, it gives Amazon a brick-and-mortar brick-and-mortar presence that will be more attractive to Costco shoppers who enjoy the shopping experience. “While these physical locations will add to Amazon's delivery network and the company's purchasing scale should allow it to undercut Whole Foods prices (if it chooses to do so). What they won't do is eliminate the reasons Costco shoppers frequent the warehouse club. Additionally, Whole Foods' lower prices don't necessarily mean that prices will compete with Costco's. Costco has pricing flexibility because of membership fees and also because it deals in large quantities with a limited variety of products. While Amazon's efforts may ultimately prove to be a threat to Costco, that threat is still distant. Aside from e-commerce, which Costco is constantly improving, there is no counteraction where Costco should.