In this article, learn about:
How to get started as a Costco supplier
What Costco expects from its vendors
Packaging and shipping standards for in-club and eCommerce
Performance, compliance, and documentation requirements
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For brands looking to sell through Costco, there’s a clear but demanding path to getting products into warehouse clubs or on Costco.com. The retailer is known for high-volume orders, low-friction packaging, and member-first pricing.
Costco suppliers are expected to meet specific requirements across purchase orders, packaging, delivery, and EDI communication. These standards ensure that product moves smoothly through Costco’s distribution system and end up in clubs or on doorsteps in excellent condition.
In this article, we’ll walk through what it takes to become a Costco supplier, what ongoing expectations vendors face, and how to stay compliant with Costco.
Becoming a Costco Supplier
Costco’s supplier onboarding process is different from other large retailers. There is no public application portal or self-service signup. Most relationships begin through direct conversations with a Costco buyer, often at a trade show, through a referral, or proactively reaching out to the appropriate division office. If the buyer is interested, the brand will be asked to begin the vendor setup process.
Related Reading: How to Become a Wholesale Supplier
Costco’s decision to move forward is based on a few key factors: product quality, cost competitiveness, operational scalability, and how well the product fits within Costco’s curated assortment. Unlike traditional retailers who store around 30,000 SKUs (Stock Keeping Unit), Costco only stocks around 4,000, so every product must stand out.
The onboarding process usually includes:
Submitting a detailed vendor profile with product and operational information
Providing samples for internal evaluation and testing
Completing paperwork related to business licensing, insurance, and compliance
Passing any required third-party facility audits (particularly for food and consumables)
Even if the brand is approved, no shipment should be made without a purchase order from Costco. A verbal agreement or informal approval from the buyer does not constitute a contract.
Managing Purchase Orders and EDI
Costco’s system depends on Electronic Data Interchange (EDI) to facilitate orders, invoices, and shipping communications. All suppliers are required to use EDI to manage their transactions.
Each purchase order is sent electronically and outlines exactly what Costco is purchasing—quantity, item numbers, delivery windows, and shipping terms. Importantly, each PO is treated as a separate contract, not a standing agreement or commitment to reorder.
Suppliers must confirm receipt of the PO and are expected to notify Costco within two business days if they cannot fulfill the order. Once a shipment is in motion, an EDI invoice must be submitted on the day of shipment.
Key fields that must be included on all documents (POs, invoices, bills of lading) include:
Costco PO number
Full supplier number
Item numbers and descriptions
Actual scale weight of the shipment
Costco does not accept price changes once a PO has been issued. This includes changes due to material cost increases, regulatory shifts, or delays in production. Any negotiation on cost must happen before a PO is sent.
Costco Packaging Standards
Costco places a strong emphasis on packaging because of how its supply chain is structured. Products are not always handled gently—pallets are moved repeatedly, stored in non-climate-controlled environments, and sometimes displayed as-is on the sales floor. Packaging must be engineered to survive all of that.
At a minimum, packaging must:
Withstand long-haul freight and vibration
Handle repeated forklift handling and mechanical clamping (up to 2,300 psi)
Tolerate extended exposure to 80–90% humidity
Stay intact in storage for at least four weeks
Avoid collapse under the weight of vertical stacking
For products stored in refrigerated or moist environments, Costco requires the use of Moisture Resistant Adhesive (MRA) to prevent boxes from breaking down. This is mandatory for cold chain goods but recommended across the board.
Additionally, Costco prohibits the use of expanded polystyrene (EPS) unless absolutely necessary. If used, it must meet strict requirements, including a minimum foam density of 20 kg and a non-crumbling, high-impact design.
Packaging isn’t just a protective layer, it’s also part of your compliance strategy. Weak packaging can lead to damaged product, returns, chargebacks, and performance penalties.
Costco Pallet Stacking Requirements
In Costco clubs, most products are displayed and sold directly from pallets. That means pallet loads must be durable, stackable, and able to retain their shape under pressure. If the pallet collapses or shifts, it not only damages the product—it creates a safety hazard in the club.
Costco outlines specific stacking strength expectations:
Load Weight (including pallet) | Must Support |
Under 750 lbs | 1,500 lbs on the bottom layer |
750 lbs or more | 2,500 lbs on the bottom layer |
Products may be stacked up to 6 feet tall on the sales floor. Regardless of how the shipment arrives, the final display height in-store must be considered when designing your packaging and pallet configuration.
Costco eCommerce Packaging Requirements
Costco.com operates under a different set of conditions than in-club sales. Online orders are shipped directly to members and are often stored for longer periods in fulfillment centers. This means packaging must hold up to time, stacking, and repeated handling.
To meet Costco’s ecommerce standards, packaging must:
Support vertical stacking up to 25 feet
Endure 15+ mechanical clampings without damage
Remain structurally sound in storage for up to one year
Maintain a stack lean of less than 3% (to avoid tip-over risk)
Unlike club products, ecommerce items must be ready to ship in their existing packaging—no repacking or over-boxing should be required. Costco recommends that suppliers work with a packaging engineer familiar with ecommerce environments and run ISTA pre-shipment tests to simulate real-world conditions.
Costco Shipping and Delivery Expectations
Costco’s delivery standards are exact and inflexible. Every PO includes shipping terms and a designated window for delivery. Suppliers are expected to follow these terms closely, regardless of whether the order is prepaid or collect.
With prepaid shipping, the supplier handles transportation. This includes scheduling freight, covering shipping costs, and ensuring the product arrives at the correct location on time. With collect shipping, Costco arranges pickup—but the supplier must have the shipment ready and compliant.
A shipment is only considered complete when:
It arrives at the exact location specified in the PO
It is received by a Costco employee and signed off with a bill of lading or electronic receipt
The shipment meets all labeling, packaging, and order requirements
Shipments that arrive more than two days early may be rejected. Late shipments can also be rejected or canceled unless Costco grants written approval. In either case, delays can result in fines, fees, or future POs being withheld.
Related Reading: Should I Use Prepaid or Collect Shipping?
Costco Performance Metrics and Compliance
Costco tracks supplier performance across a number of key categories to maintain efficiency and product availability. These include:
On-time, in-full delivery
Packaging and pallet compliance
EDI document accuracy
Shipment damage and return rates
Suppliers that miss delivery windows, send incomplete orders, or fail to meet packaging standards may receive chargebacks or be removed from Costco’s vendor list. Every shipment is an opportunity to maintain or hurt your performance record.
Costco expects vendors to proactively track their metrics, report issues before they escalate, and consistently make improvements. Internal reviews with Costco buyers may include a deep dive into these metrics, especially if there are repeat issues.
Common Mistakes to Avoid
Even experienced suppliers can run into trouble if they overlook the fine print. Some of the most common issues include:
Shipping without a PO
Sending product that doesn’t match the approved spec
Failing to label or document shipments properly
Assuming last year’s packaging is still compliant
Shipping early or missing delivery appointments without notice
Costco expects suppliers to stay current with evolving requirements. What passed a year ago may no longer be acceptable if packaging or shipping standards have been updated. Regular check-ins with your Costco buyer or supply chain contact can help avoid misunderstandings.
Sustainability and Ethical Sourcing
Costco holds its suppliers to high ethical and environmental standards. As part of the onboarding process, suppliers must agree to follow Costco’s Supplier Code of Conduct, which outlines expectations around labor practices, safety, and responsible sourcing.
These standards include:
No use of child labor or forced labor
Safe working conditions for employees and contractors
Compliance with applicable regulations (FDA, USDA, Prop 65, etc.)
Efforts to minimize environmental impact, including recyclable or compostable packaging
Costco may require suppliers to submit third-party certifications or undergo audits to verify compliance. As sustainability becomes a greater focus for Costco members, these standards will only become more important.
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