now I am an executive member at the
Costco very berry with extra berries the
case of pumpkin pie actually and the
king crab works I think some of their
customer base is absolutely addicted to
Costco welcome to Costco where
everything is huge and it's been like
this for 30 years from the carts to the
warehouses to the products themselves
it's a store fit for Giants it's
designed as much for a forklift truck as
it is for people that sense of scale is
part of what the Costco experience and
the warehouse experience is all about
and Costco has made billions in revenue
from its no-frills model nothing in a
store is placed by accident take for
instance staples like milk and eggs you
have to travel all this way just to find
the dairy this leads to something Costco
calls treasure-hunting the more you see
the more you discover the more you end
up putting in your cart you wind up
buying other things you probably don't
really need you almost have to go in
with blinders on and walk right past the
things that you are tempted to buy but
buying in bulk isn't for everyone for me
personally it would be a waste of money
to get a Costco membership because it's
I can't use up 25 pounds of flour or you
know some of the really a big bulk items
it's just isn't worth it for me the
average Costco transaction is between
130 and 140 dollars but members have
been known to spend much more I thought
I would spend about that money five
dollars and I ended up sending over 700
180 765 221 dollars in change you can
come in here and spend about two hundred
fifty three hundred dollars easy they
have a very loyal membership base 90% of
their members renew their membership
being a wholesale club member comes at a
price
the interesting thing about Costco is
that when you speak to a consumer they
go quite frequently I have spoken to
people that go and drop in into a Costco
three four times a week it is a very
frictionless experience moving through a
Costco is pretty seamless there's
minimal signage the aisles are super
wide and the carts glide on the concrete
floors there are free samples and even
the occasional massage demonstration
you're free nay encouraged to wander and
take your time I have so many memories
of like being a kid with my sister like
running around the store playing tag or
like hide-and-seek because it's so easy
to hide in there so my parents would
leave me on the couch there and I'd like
go through all the books they'd come
back to pick me up it's time to leave
the longer I can hold you in the store
the more likely I'm going to get more
money out of your pocket I'm a huge fan
of the Cosmo food Corps in the food
court food court I only went to Costco
with my parents just to go to the food
court that front snack bar is both a
snack bar by Diaz also a parking lot and
it's a parking lot for your two legged
pets called often children and husbands
like a big ones
there's a direct correlation between
people who sample and the amount of
money you spend aside from their famous
dollar fifty hot dog combo Costco is
well known for its in-house brand
Kirkland Signature Kirkland paper goods
bottled water and olive oil are some of
their most beloved products but Costco
is an all both toilet paper and coffee
beans it also carries luxury items like
this engagement ring that cost nearly
twenty eight thousand dollars at first
it seems asinine
why on earth would Costco be selling
diamonds if you dig a little deeper it
actually makes sense
Costco's also built its franchise with
an older American affluent consumer it
is the baby boomer generation that has
the money in their pockets and the
incentive to save that baby boomer
generation controls the overwhelming
majority of wealth in North America and
you know what they're going to be around
for a while longer
Costco isn't just a store it's an
ecosystem
my mom's a master of Costco she even
bought curtains there and she gets
guests there
she's embedded in the whole Costco
ecosystem the most loyal consumers have
been dedicating more and more share of
wallet towards Costco so they might have
started with household goods and then
they went into groceries and they
started buying appliances before they
know they were getting all of their
furniture from Costco and now you see a
lot of people also participating in
their car and hotel programs for
instance if I think about white people
keep coming back to Costco there are
free things that are part of who they
are as a brand that is very well-known
which is value quality and consistency
asko you say
money members love Costco for their
cheap high quality products like peanut
butter for New Yorkers it's clearly a
better deal to shop at Costco and let's
not forget about the wine my favorite
part of the Costco experience is
probably their wine section which I know
it sounds a little weird
Costco it does obviously have some
really great beautiful expensive wines
but it also gives you a lot of value
friendly wines which are really really
nice Costco is the largest seller of
fine wine and expensive spirits in North
America they make their money getting
you to buy 200 garbage bags all at the
same time they make money getting you to
buy ten pounds of coffee rather than two
but stocking all those garbage bags
isn't free so how is Costco making a
profit selling wholesale goods Costco
runs about four thousand items on
average per warehouse which allows them
to be extremely efficient employees
don't waste time restocking shelves
because of the stores design the other
upside of having such a curated
assortment of faff selling items shows
up in their balance sheet they're able
typically to sell their inventory before
they actually have to pay it which keeps
the need for working capital pretty low
they have direct relationships with all
of their suppliers and have a logistics
setup where they the goods are delivered
directly to their warehouse so that
keeps the sgna at a very minimum level
Costco plays by the golden rule you
treat your suppliers and employees well
they treat the customer well and you
make tons of money that's the Costco
secret so how does this model hold up in
the age of Amazon the surgeons of Amazon
has not heard Costco's business and
there are many consumer tests or retail
tests out there that compare if you buy
in bulk at Amazon versus buying in bulk
at Costco where do you get the best deal
seventy to eighty percent of the time
you're still getting the best deal
Kafka almost all major big-box merchants
have some form of online presence having
some form of physical place for us to be
able to do our drive-by and pick
something up is going to be part of our
consuming future for at least the next
50 years
it seems Costco nailed the formula when
it opened 30 years ago but it isn't
perfect Costco has been traditionally a
leader in looking at how to improve the
sustainability of their supply chains
they actually have done a great job at
leading the way towards sustainable
seafood and I know we're working
currently on sustainable beef among
other things one of the things that they
could be doing to improve their
performances respond to one of the most
pressing issues at the moment which is
how to reduce our plastic use and
plastic waste globally so anything they
could do to improve their packaging or
improve their their alternative
offerings to help customers eliminate
the use of single-use plastics would be
great despite the criticism Costco
members remain loyal for one simple
reason
everyone loves a good deal are you a
Costco shopper do you think it's worth
it let us know in the comments below
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