Costco was founded in 1976 with the not inconsiderable amount of 2.5 million dollars raised by the brothers Sol and Robert Price from family and friends.

The idea was to create a private shopping club, a chain of stores in which only those members who had been previously registered could buy. An annual fee Can be set that should be renewed in those periods. It is essential to their business model so we will analyze it in depth later.

The Shopping Club Concept

We have already briefly pointed it out, but it is precisely that differential advantage that we were talking about with respect to great rivals such as Walmart. Setting an annual fee and an essential membership card to access their stores and make the payment, they were achieving 3 things at once.

Encourage Recurrence

Once they have managed to become a Costco partner, it will always be one of the first options you handle. It is an added purchase motivation to “return on investment.”

Create a Sense of Belonging and Exclusivity

Anyone can be a club colleague; there are no exclusive rules. But it is known that being part of a community is always an extra.

Profitability

One of Costco’s advantages always lies in the prices the customer receives. Being a member paying the $60 of the standard member or the $120 of the Gold Star Executive member means that the club is financed and can sell at meager prices, as much as they sell them at cost price.

What does Costco Sell?

What does Costco Sell_

It has a reasonably horizontal assortment. We can find many food products (both fresh, frozen, or prepared), drinks, cleaning, and hygiene products. Basically what you can find in any supermarket. This type of product is widespread to find bundle packs and large formats with large families in mind and, especially, professional clients.

Costco is characterize by having a wide assortment of technological products. Therefore, we can find everything from televisions to Apple computers or the latest generation of telephony. Of course, there is everything in terms of small and large appliances .

Almost anything that can be sold has a place at Costco furniture, exercise machines, camping supplies, books, stationery even jewelry.

But Costco also provides other types of services travel agencies, fast mechanics, opticians, gas stations, or travel agencies. As a result, they have been enriching their catalog over the years.

Business and Management Model

Something is interesting about the way they stock their warehouses. To begin with, the fact that, even having a very horizontally extend catalog does not have an excessive number of references for each category.

They move in about 3,800 approximately. Of these, 3,300 are fix, and the other 500 are one-off offers with high turnover and excellent prices. It is what they call ” treasure hunting ” and is highly encourage by the company itself.

Another exciting aspect is that of the company’s white label. In the United States, they are not as prone to these as in Europe, but Kirkland products have become a benchmark for their extraordinary value for money. In addition, it is a transversal brand, which ranges from diapers or barbecue sauce to prescription glasses, a hearing aid, or jewelry.

Customer Service of Costco

It is worth reviewing it: this is an unabashedly customer-centric company. For them, customer satisfaction is paramount since, as recurrence is an essential part of their business model, they want the life cycle to be as long as possible.

That is why its staff is extraordinarily attentive, with an extraordinary service vocation. It is so both among the people who work in the store and in any services or the offices.

Costco’s Keys To Success

Return Generators

They have a thousand tactics to encourage users to return to their stores, from paying members to “treasure hunts” with high turnover products.

Own Business Model

The shopping club brought to a large retailer is a brilliant idea, as the success of Costco has shown.

Premium White Label

Kirkland has converted a benchmark and has even displaced the prejudiced idea that assimilates brands of this type to low quality. In fact, in the style of what is happening in Spain with Mercadona, they have transformed Kirkland into an international brand asset.

Unusual Profitability

Few businesses are commit to giving up the commercial margin for product sales and dare to generate their profit exclusively through membership.

Product + Service

In its warehouses, the entire spectrum of commercial needs can also covered. Therefore, Costco is an exciting option since they do not have to make multiple trips to protect them.

Global Concept

A Costco customer is worldwide. In other words, with your valid card, you can access the stocks in Seville, New York, Ontario, or Beijing. In addition, you will constantly find the same organization and product range, with which the perception of globality is accentuating.

Conclusion

Without a doubt, Costco is an excellent example of what we discussed. Yet, at first glance, it is not too different from any other large area massive warehouses full of products with people walking between the shelves.

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