Dive Brief:

• Citigroup executives said the company is "working through" snafus related to its acquisition of wholesale retailer Costco’s credit card business.

• Despite months of preparation for its switch from American Express to Citi Visa for its store-branded credit card, Costco last month came under fire from members who didn't receive the new card or couldn't activate it.

• Speaking on Citigroup's second-quarter results conference call Friday, CEO Michael Corbat told analysts that high customer call questions about card activation, statements and payments were initially overwhelming but “We’re gaining on it. We’re very focused on it. We’ve got a lot of resources deployed against it and it’s something we can fix in the short order.”

Dive Insight:

The Costco Anywhere Visa Card by Citi was designed to accrue better awards for Costco members while also saving the wholesale club millions annually on lower fees. Citigroup CFO John Gerspach called the Costco card launch "one of the largest portfolio implementation transfers on a single day that’s ever been attempted. And that’s not to give us excuses, I mean, we should be performing better than we are, but we’re working on that. But again, it’s a massive program.”

Gerspach also told analysts that Citigroup’s new Costco business includes “330,000 new card acquisitions just since we took over the book, [a number] that far exceeded our expectations by a factor of 2 and 2.5 times.”

While it appears Citi is to blame for not distributing the new cards in a timely manner and delivering poor customer service when Costco members called in for more information, it’s Costco that has suffered the public relations hit and has been absorbing the brunt of customer outrage. Rival warehouse retailer Sam’s Club, a unit of Wal-Mart Stores Inc., even granted Costco members free admission through July 4, although there’s no evidence yet to indicate that many Costco members were fed up enough to leave.

The debacle now appears to be coming to a close, and as irritating as it has been for many Costco members, the retailer maintains many enduring advantages. In fact, Deutsche Bank retail analyst Paul Trussell last year deemed Costco “Amazon-proof,” thanks to its membership model and physical-store advantage, stating that members tend to be “stickier” than other shoppers because they’ve already invested in a retailer. Moreover, many shoppers go to a Costco store with a grocery list, but leave with many things not on the list.

Costco’s move to more organic grocery items is seen as another competitive strength, as is (at least before the card rollout issues) the shift from American Express to Visa.

“Of three of the largest retailers in the world, Amazon and Costco look unstoppable,” Columbia University retail studies expert Mark Cohen wrote in Forbes earlier this year. “The third, and largest, Wal-Mart, looks completely stuck... Costco is, in its own way, as unstoppable as Amazon. Their stores throughout the world are among the most productive in the industry. And unlike most brick and mortar based retail businesses, seemingly untouched by customers’ stampede-like migration to the Internet.”