Just before Thanksgiving I was in my local Costco store, gathering up supplies for our holiday supper. As I neared the checkout line, I saw a flash of a familiar iridescent green, highlighted with black. “Huh? Could it be?” Sure enough there in front of a teaming crowd of Costco shoppers was a brand new Kawasaki motocross bike locked in a display, pulling a wheelie. A number of people were gathered around it and dipping into the supply of promotional fliers.
If you’ve been reading Dealernews for a few years, you’ll know that I’ve been an advocate for some OEM, any OEM, jumping into a sales program proposed by massive warehouse chain and giving it a try. The folks who manage the Costco Auto Program, Affinity Development, have been working on getting the motorcycle industry involved since 2006 and have presented their program to all the Japanese OEMs as well as a number of the European brands, but until recently, no takers. That is, until now.
Kawasaki Motors Corp., is the first OEM to sign on with Costco Wholesale for a pilot program in Southern California’s Los Angeles, Orange and San Diego counties. The trial effort involves a select number of dealerships that are served by 15 Costco warehouse stores, each of which have a display consisting of a motorcycle on a stand and promotional fliers. The program kicked off with KX motocross bikes, but will be expanded to include more models as it progresses.
Here’s how the program works. An interested Costco member contacts the store either by phone or online, registers with Costco and is referred to the nearest participating Kawasaki dealer to his home, or place of business. The member goes to the dealership, presents his membership card, is provided with a copy of the member-only price sheet, and selects his motorcycle. Costco serves only as a referral point. All transactions take place at the participating Kawasaki dealership.
The prices have already been negotiated between Costco and the dealer, so it’s a fair price and there’s no customer haggling. The member then simply needs to complete a redemption form and return it to Costco along with his purchase agreement. He then completes a customer satisfaction survey and receives a $250 Costco Cash card. As an added incentive, anyone with a Costco membership card can receive a 20 percent discount on parts, accessories and apparel at a participating dealer simply by showing their membership card. Items already on sale are excluded from this offer.
According to an Affinity Development representative, one of the concerns expressed by OEMs was the devaluation of carry-over product. Kawasaki resolved this problem by limiting the promotion to 2011 product and possibly not having much carryover product in the field.
Dave Lautner, Kawasaki’s manager of dealer performance and communications, was very clear that the program is a trial and would have to demonstrate its success before Kawasaki would be willing to roll it out to other dealers throughout the nation. A recap is scheduled for sometime in January and at that time a determination will be made to roll it out nationwide or discontinue the program. Lautner is confident that the program will be a success, and would be happy with only a marginal sales increase, but is taking a “wait and see” attitude about it.
Jeff Skeen, CEO of Affinity Development, anticipates that the pilot program will be a success and will be rolled out to the entire Costco network over the course of this winter and spring. At this point, according to Skeen, they’re planning displays of cruiser motorcycles for the spring, and Jet-Ski’s in the summer.
The program went into effect shortly before Thanksgiving, and a call to a couple of participating dealers indicated that they were delighted with the promotion. David Nadler, general manager at Del Amo Motorsports in Redondo Beach, Calif., indicated he’d sold two motorcycles since the program began. Nadler agreed that the KX models weren’t exactly the right bike for this audience, but felt when motorcycles with a broader appeal were available things should take off.
When I spoke with Skeen at the beginning of December, the program had been in place for only a few weeks and the website wasn’t yet operational. Typically they receive over 10 times the number of inquiries via the internet than they do via phone, but even at that they still had received 124 calls. (Continued)