The online brokerage Sharebuilder is the latest financial services company to look for growth by forging a partnership with a big retail store chain.
Following the leads of E-Trade, which now has kiosks in Target stores, and Toronto-Dominion Bank, which has a partnership with Wal-Mart Stores Inc., Sharebuilder now is selling its services through the Web site of Costco Wholesaler Corp., an Issaquah, Wash.-based discount retailer, said Jeffrey T. Seely, the chairman and chief executive officer of Sharebuilder.
The partnership, which was begun in early May, enables the deep discount online brokerage to market itself through Costco's Web site in an effort to reach the retailer's 20 million cardholders, Mr. Seely said.
Costco has "a terrific community of loyal members," Mr. Seely said. A major attraction for him is Costco's customer demographics, which closely match what Sharebuilder is after, he said.
These customers - with household incomes of $40,000 to $60,000 per year, largely male and college-educated - are similar to those Sharebuilder has targeted in deals with banking companies like National City Corp. and Wells Fargo & Co.
Sharebuilder has amassed half a million accounts since its founding in December 1999 in Bellevue, Wash., according to Mr. Seely.
Many Costco members shop on the Internet, he said, and 60% own their own computers and use the Internet regularly.
The brokerage firm is going after clients whose net worth puts them out of reach for discount brokers like Charles Schwab & Co. or E-Trade. It charges customers $4 per trade or $12 per month for an unlimited number of buy orders per month, and it has no asset minimums. Sell orders cost $16.
As an incentive for Costco customers, Sharebuilder is rebating 25% of its first-year trading fees to those who stay more than a year, Mr. Seely said. Basic membership with the discount retailer costs $49 per year, he said.
Until now, Sharebuilder's primary intermediaries have been banks and credit unions, Mr. Seely said.
Since the Costco partnership is Sharebuilder's first completely outside the financial services industry, Mr. Seely said he was unsure what degree of market penetration to expect, or even to aim for.
At a bank or a credit union, Sharebuilder aims for 1% to 3% of customers, he said, but with this deal there is "no exact rule of thumb."
Costco, however, has been selling other financial services for some time. It offers mortgages and auto loans and made a deal last August to sell American Express property/casualty insurance. Amex is also the only major credit card accepted in Costco stores.
Sharebuilder is a wholly owned subsidiary of Netstock Corp. in Bellevue.
