Costco Wholesale Corp. (COST) - Get Costco Wholesale Corporation Report could use an injection of tech-savviness from Silicon Valley giants Facebook (FB) - Get Meta Platforms Inc. Class A Report or Alphabet's (GOOGL) - Get Alphabet Inc. Class A Report Google, according to a former Amazon executive.
"Costco is doing well now, but what about 10 years from now?" asked Brittain Ladd, who left Amazon in May for family reasons after working there for two years, first as the senior manager of strategy and expansion for AmazonFresh and then as the senior manager of Amazon Global Logistics for the Special Projects unit.
Costco should have made a play for Whole Foods (WFM) , Ladd said. But that company was snatched up by Amazon in mid-June for $13.7 billion after just six months of talks. Since the acquisition was announced on June 16, shares of Costco have slipped 15.5% to $150.44 as investors worry about who will be able to compete with Amazon in the grocery sector.
Now Costco should be thinking about the e-commerce possibilities with Facebook or Google, Ladd advised.
Facebook currently has over two billion monthly active users, meaning it arguably has more e-commerce potential than anyone else and could build up a platform faster than anyone else, Ladd said. In late 2016, Facebook launched its Marketplace platform on its social media site that lets users buy and sell items within their local community.
Target Corp. (TGT) - Get Target Corporation Report is another traditional retailer that could benefit from a partnership with Facebook by including a Target icon on the social platform that would allow its two billion users to buy items directly from Target without leaving Facebook, he noted. "Not enough analysts are thinking about 'What would prevent Facebook or Google from getting into this space?'" Ladd said.
Traditional grocery players like Costco, Target, Kroger Co. (KO) - Get Coca-Cola Company Report , and Wal-Mart Stores Inc. (WMT) - Get Walmart Inc. Report have to do something unique like partnering with Facebook to make their shopping experience more interesting than what customers are getting on Amazon.com, Ladd said. "They have to be thinking of big ideas because Amazon has made it so that small ideas don't cut it anymore," he explained.
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