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Costco Expands Relationship With CommerceHub to Support Canadian Drop-Ship Fulfillment

Expansion Follows Highly Successful Initial Implementation in United States

Building on its role as the standard in drop-ship fulfillment solutions for multi-channel merchants, CommerceHub announced today that Costco, an international operator of membership warehouses designed to help small-to-medium-sized businesses reduce costs in purchasing for resale and for everyday business uses, will expand its use of CommerceHub to support their Canadian.com operations. Building upon the successes achieved to date, Costco.com will be expanding its Canadian presence over the next several months and has selected CommerceHub to serve as the platform for managing its drop-shipment operations.

CommerceHub's Universal Connection Hub platform and Drop-Ship Master application suite, the industry's standard drop-ship fulfillment solution, will enable Costco Canada to rapidly integrate new suppliers and expand product offerings for its on-line business without taking on inventory or the costs and technical challenges typically associated with connecting disparate trading partners. Further, CommerceHub's Drop-Ship Master application will provide Costco Canada with complete visibility into orders from the web site through delivery, as well as exception-based management to ensure superior customer service. By using the CommerceHub platform, Costco Canada will be able to achieve the same levels of brand management, fulfillment performance and levels of customer service as if they were shipping the products directly from their own distribution center.

"The overwhelming success of the CommerceHub relationship to date for the Costco.com business in the United States made it an easy decision to leverage their capabilities as we expand into Canada," said Mike Pollard, Vice President of Costco.com. "As Costco.com expands its presence into Canada, the CommerceHub platform will serve as a core component of our infrastructure, enabling us to achieve our growth objectives, while at the same time eliminating our inventory risk and cost."

"We are excited by Costco's decision to expand their use of CommerceHub as they rollout their Costco.com business in Canada," said Frank Poore, President and CEO of CommerceHub. "Costco has been an important partner of ours and we value their business and trust in our organization to provide them with the critical tools and capabilities needed to achieve their objectives in the management of their drop-ship fulfillment network. This expansion further validates our position as the standard in drop-ship fulfillment."

About CommerceHub

CommerceHub is the standard in drop-ship fulfillment and provides solutions for many of the world's leading multi-channel merchants, including QVC, Target, Sears, Staples, ShopNBC, Costco and Federated, among others. By providing a single plug-and-play connection to multiple trading partners, CommerceHub enables any retailer to electronically integrate with its suppliers, regardless of the unique systems and capabilities that exist among them. CommerceHub's applications enable retailers to gain real-time visibility into their entire supply chain to ensure the proper delivery of goods under a variety of fulfillment models. In addition, the applications enable merchants to rapidly expand product offerings, preserve brand identity, and manage, analyze, and deliver comprehensive order information to their customers, all with no inventory risk. World-class merchants and suppliers have chosen CommerceHub to increase speed to market, grow sales, reduce expenses, and enhance customer service by improving supply chain performance.

About Costco

Costco currently operates 441 warehouses, including 327 in the United States and Puerto Rico, 63 in Canada, 15 in the United Kingdom, five in Korea, three in Taiwan, four in Japan and 24 in Mexico. The Company also operates Costco Online, an electronic commerce web site, at www.costco.com. The Company plans to open an additional 12 to 13 new warehouses (including the relocation of three warehouses to larger and better-located facilities) prior to the end of calendar year 2004.