For much of beauty’s modern retail era, distribution strategy largely followed a familiar hierarchy.
Prestige brands pursued luxury department stores and specialty retail to double down on exclusivity and desirability. Emerging brands built direct-to-consumer businesses to maintain ownership over customer relationships and margins. Mass distribution delivered on reach. And more recently, social commerce and marketplaces like TikTok Shop and Amazon introduced new channels for rapid acquisition and conversion.
Warehouse retailers have rarely occupied a meaningful role in that conversation—until now.
Long viewed as a destination for household staples, grocery bulk buys, and practical, value-driven shopping habits, Costco is quietly expanding its role in beauty while attracting a growing mix of brands across skincare, wellness, suncare, and K- and J-beauty. Rather than functioning as a traditional wholesale outlet, Costco appears to be positioning itself as a different kind of beauty channel altogether.
Some brands have embraced the retailer with open arms, integrating Costco into broader growth strategies. Others are watching closely, not yet ready to commit, but paying attention nonetheless.
K-beauty brand Mixsoon recently announced an expansion into approximately 500 US Costco warehouse locations after initial demand on Costco’s website exceeded expectations, and will extend that presence across 12 global markets totaling about 570 stores worldwide. Sunscreen company Vacation entered the retailer, launching in-store in March 2025, with exclusive formats developed specifically for Costco shoppers. Clio Cosmetics' Goodal K-beauty brand made Costco a central pillar of its US awareness strategy. Beauty creator accounts dedicated to Costco finds are attracting significant engagement across platforms, turning limited inventory drops and unexpected premium discoveries into moments of social discovery.
In fiscal year 2025, Costco generated approximately $269.9 billion in net sales, an 8.1% year-over-year increase from $249.6 billion, and collected more than $5.3 billion in membership fee revenue globally, up 10% from the prior year. Membership renewal rates remained at 92.1% in the US and Canada, reinforcing one of retail's strongest recurring consumer ecosystems. The retailer operates approximately 900 warehouses across 14 markets, with over 600 in the United States alone.
Costco's appeal may start with scale, but for beauty brands, it's really about the shopper.
With about 145.9 million cardholders, Costco members have a median household income of approximately $128,000 as of 2023, roughly 60% above the US median. The core demographic skews toward adults aged 35 to 64, the majority of whom are college-educated homeowners. Executive members, who pay $130 annually and represent nearly 37.6% of paid members, drive around 73% of Costco's global net sales. In short, these are not bargain hunters; they are value-seeking, brand-literate consumers who trust the channel to curate on their behalf.
For years, brands could rely on rapid customer acquisition through paid media, influencer partnerships, and digital-first growth strategies. Today, rising acquisition costs and intensifying competition have forced many companies to look toward retail environments that already aggregate high-intent consumers. Costco's members arrive pre-qualified.
Janet Wiebke, Costco's General Merchandising Manager and Vice President overseeing health and beauty aids, described a gradual internal shift in how the company thinks about beauty. “Historically, we've never really been the [beauty] trendsetters,” she said, “but with K-beauty and J-beauty, we were more on the earlier side … and it's paying off.” As demand accelerated, the company began investing more intentionally. “Once we started seeing success … we thought, ‘Well, let's become that beauty destination.’”
That ambition does not mean Costco intends to become the next specialty beauty retailer. Instead, it’s building a beauty category around an operating model that prioritizes throughput over assortment. “An item can’t just be hot,” Wiebke said, adding that it also has to make sense for their consumer base.
Unlike traditional beauty retailers that depend on broad assortments and extended shelf space, Costco's model rewards velocity.
“We're not in an item business,” Wiebke explained. “We're very selective … and we're very SKU-limited.” The retailer stocks its beauty aisle with rotating assortments intentionally designed to provide a “treasure hunt” environment for members. What is on the floor today may not be there next week.
That operating structure influences nearly every decision brands make before entering. Multiple executives interviewed by BeautyMatter described Costco's onboarding as much more operationally intensive than that of traditional wholesale.
The challenge around color cosmetics illustrates the model well. “Color cosmetics are difficult in our environment because of the shades,” Wiebke said. “There are so many shades, whether it's shadow, foundation, or lip, and we just can't have that.” So Costco leans heavily into skincare, because the category's hero products can travel across skin types without the shade complexity that makes color an operational liability at warehouse scale.
Which means for a brand entering the channel, you aren’t competing on assortment depth. You are competing on how quickly a single SKU can move.
K-beauty is the clearest expression of Costco's beauty strategy, while Vacation proves that brands don't have to be Korean to win by the same playbook. K-beauty US retail sales exceeded $2 billion in 2025, up 37% from the prior year, according to NielsenIQ, a staggering contrast to the broader beauty market, which grew at a mid-single-digit pace.
What’s more, in 2025, South Korea surpassed the US to become the world’s second-largest cosmetics exporter after France. Costco.com now carries more than 50 K-beauty brands. Wiebke acknowledged that Costco moved into the category earlier than many expected. “I think we brought in some brands even before Ulta and Sephora had them on their floors,” she said.
K-beauty's success at Costco is structural, not cosmetic. Brands built around a single hero ingredient, a clear efficacy story, and accessible price-to-value ratios translate exceptionally well into a retail environment where shoppers make decisions without editorial context or a trained beauty advisor.
Amy Lee, Global Head of Marketing for Mixsoon, put it plainly. “Our core customer in other channels is often very ingredient-savvy and already deep in the K-beauty world. The Costco shopper is broader. They are smart, value-driven, and very practical,” she said. Bean Essence—Mixsoon’s hero product, which has surpassed 2.85 million cumulative units sold globally since 2021—validated the model online before Mixsoon ever attempted physical scale. “Costco.com helped us validate that the customer was there,” Lee said. “We saw that shoppers were responding not only to the value but to the clarity of the product story.”
Caroline Seong, Senior Marketing Manager at Clio Cosmetics USA, described Goodal's Costco customer as someone who “may not have sought us out on their own” but buys on results and trust in Costco's curation rather than pre-existing brand familiarity. It's a noteworthy distinction: Costco is not reinforcing equity among K-beauty converts. It is making first introductions, at scale, through a channel consumers already trust. “Retailers like Costco are accelerating that shift,” Seong said.
The same logic holds outside K-beauty. Vacation launched at Costco in March 2025 with exclusive packaging, a custom pallet design, and scratch-and-sniff stickers—translating its brand identity rather than diluting it. London Nielsen Krupski, General Manager at Vacation, framed the entry as exactly that. “It was less about changing who we are as a brand and more about translating Vacation into a retail environment built around trust and strong consumer value,” she said. The early signal wasn't sell-through data; it was Vacation's social channels flooding with loyalists excited to find their favorite sunscreen brand at Costco. That spillover into earned media is increasingly how brands justify the margin trade-off internally. “We see Costco as a driver of broader brand awareness, trial, and repeat purchase for our total business,” Nielsen Krupski said.
Across categories, the brands winning at Costco share a common profile: one strong hero product with a clear benefit, packaging that feels intentional, and the operational backbone to move volume fast. The channel doesn't reward complexity; instead, it rewards brands that know exactly what they're selling and why.
Conviction, however, only gets a brand so far. The operational demands of Costco are significant and often underestimated.
“The biggest challenge is the level of preparation required before the product even reaches the floor,” Lee said. “Forecasting, inventory timing, packaging, compliance, logistics, and sell-through planning all have to be very tight. Costco moves at scale, so small mistakes become expensive quickly. Many brands focus on getting into Costco, but the real work begins after the placement is confirmed. Seong described a similar reckoning at Goodal. “It requires a level of rigor that sharpens how you run the whole business. Honestly, we've grown from it.”
Getting into Costco rarely happens without help. Most brands work with brokers—third-party partners who know the system—though strategy, everyone agrees, has to stay with the brand. “Partners such as brokers or distributors can be helpful, especially in navigating retail expectations,” Lee said, “but the brand still has to own the strategy. At the end of the day, Costco needs consistent execution, not just a good pitch.”
Sephora and Ulta Beauty build consumer trust and loyalty through curation and expert guidance. TikTok Shop does it through virality. Amazon through reviews and repeat purchases. Costco does something different: members walk in already trusting that what's on the floor is worth buying, and that trust extends to every brand inside it—a quieter but powerful endorsement.
Still, the biggest misconception brands bring to Costco is that the channel is primarily about volume. It isn't. “It can be easy to look at Costco only through the lens of scale,” Nielsen Krupski said, “but the real opportunity is understanding the Costco members and building something that feels right for them.” Seong framed the economics the same way. “The way we think about it is total brand economics—volume, visibility, and the halo effect it creates—not just the margin on a single unit.” And Lee added, “Costco is not just a sales channel. It is also a trust-building channel.”
What Costco is quietly building inside beauty is something closer to a high-trust discovery engine for consumers who already know how to spend. And the brands best positioned to capitalize on that are the ones that recognize the difference and show up prepared for what comes after the placement.
