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How Kirkland Signature Powers Costco's Success
- craz8 8y agoA small correction: Costco is now headquartered in Issaquah, but they started out in the city of Kirkland. They moved to Issaquah (a 20 minute drive) in 1994, about the time the Kirkland brand was created
- walrus01 8y agoI think the first Costco was located south of downtown Seattle, south of the stadiums? Or is it the one that is actually in Kirkland relatively close to the 405?
- deleted 8y ago[deleted]
- peterkshultz 8y agoSouth of downtown was the first one, yes. See "The History of Costco" at: https://www.costco.com/about.html https://www.costco.com/about.html
- _eht 8y agoI see a lot of up and coming angst from politicians about how Amazon the platform, and Amazon the product(s) should be broken up due to unfair advantage over other retailers trying to sell on the AMZN platform. Is AMZN’s framework similar and does it not mimic a lot of massive sales platforms from Costco to Walmart, and even to smaller grocery stores who share their shelves (the platform) with products often times mixed with self branded products?
- onetimemanytime 8y agoAMZN is GLOBAL, Walmart++ need to buy real estate, get licenses etc etc to open new stores. Amazon is a click away. But yeah, Walmart does the same as Costco: want to keep selling to us? Lower the prices. If they don't sell to Walmart they go bankrupt in x years, if they sell at a loss, they go bankrupt a little later. https://www.fastcompany.com/47593/wal-mart-you-dont-know https://www.fastcompany.com/47593/wal-mart-you-dont-know
- maxerickson 8y agoWalmart is also one of the largest ecommerce players.
- AjithAntony 8y agoThe key difference is that Amazon is selling its infinitely deep platform to third parties. It is those third parties that bear all the risk of developing and marketing a product. Costco and Wal-Mart buyers and merchandisers still need to take the risk of choosing what limited inventory to stock on the shelf and commit resources to making it happen. Amazon also invites all competitors in a product segment to compete with each other. Using the information gathered from the sales, reviews, page views, demographics, and who knows what else, they can create the perfect Amazon basics version of that product pretty much on the fly with pretty low commitment.
- masonic 8y agoAnd Costco takes primary responsibility for all its products, even if relabeled, and has a generous return policy.
- ars 8y agoDo you really think Costco eats the cost? They force the manufacturer to take it back as a condition of doing business.
- teej 8y agoEverything you’ve claimed about Amazon applies to traditional retailers.
- benj111 8y agoHe's referring to Amazon marketplace. Providing a platform for third parties isn't done by traditional retailers.
- kinkrtyavimoodh 8y agoWhy not? When Costco offers its shelf space to non-Costco brands, how is it any different from what Amazon does?
- syntaxing 8y agoI was thinking the exact same thing the other day when I was listening to NPRs Antitrust series. The talk about this for a bit but the main difference is that Amazon pitches itself as a platform/portal. Essentially any company can it as medium to sell things. It's anti consumer since they are now selling their own brand while promoting it on this so called portal. Costco on the other hand is a whole seller. Companies work with contracts and agreements with Costco to arrange for the selling goods. On top if that, Costco does not explcity promote their goods. If you look at salts, they are equally placed for you to select and the customer can decide themselves.
- bdcravens 8y agoI believe a number of the Kirkland products are just rebrands. For example, their dog food, which is highly rated, is actually manufactured by Diamond. https://www.certapet.com/kirkland-dog-food/ https://www.certapet.com/kirkland-dog-food/
- Scoundreller 8y agoAnd it isn’t necessarily the same product everywhere. Canadian Kirkland shampoo is different than the US. I’ve heard toilet paper is regional. Probably a lot of other products, and I somehow think their dog food might be.
- sbarre 8y agoYeah to me Kirkland on the label just means that Costco had a hand in selecting and vetting the product, and since they typically focus on carrying one kind of a certain product, I can assume the quality standards are high enough. I don't care who actually made it, as long as it does what it says it does
- extrapickles 8y agoMost store brands are made by contract manufacturers to the stores specifactions. It’s rare for a store to directly manufacture their own goods in the food industry. This is because a store only needs a given type of facility for a few days a month, making it uneconomical to operate it themselves.
- joezydeco 8y agoThat's starting to change a little. https://www.eater.com/2018/12/11/18136019/costco-rotisserie-chicken-farming-agriculture-nebraska https://www.eater.com/2018/12/11/18136019/costco-rotisserie-... "At the center of the move is the company’s $4.99 rotisserie chicken. In 2014, Costco reported selling 78 million of these processed, four-pound birds a year. In order to guarantee a steady supply and maintain the price, Costco fixed its eye on Nebraska as the best place to start raising and processing its own supply of chickens, and “break free of the monopoly” held by companies such as Tyson and Pilgrim’s Pride, much like it did for sausage and hotdogs with its Kirkland plant in Tracy, California."
- syntaxing 8y agoI love Kirkland branded stuff. The best thing you have to try is their Kirkland branded hard liquor particularly the vodka. Affordable and smooth! Their wine is good to me, but most wine connoisseur disagree.
- Xylakant 8y ago> Their wine is good to me, but most wine connoisseur disagree. Unless you have a connoisseur as guest and want to impress them, “good to you” is the more important qualifier. There’s probably a lower threshold to wine quality that you shouldn’t go under (additives that are unhealthy and such), but above that, there’s little point in buying wine that connoisseurs recommend and you dislike.
- syntaxing 8y agoTotally agree. Kirkland wine is good because it actually tastes like real wine but is the same price as grape flavored alcohol water.
- carrja99 8y agoThere's a rumor that their bourbon is actually sourced from some quality stock.
- syntaxing 8y agoI have their 7 year Bourbon and it's super tasty. I would say its pretty close to Bulliet.
- greggyb 8y agoHearsay from a winery in Cali I recently visited: I liked the wine I was tasting and the guy pouring mentioned that Costco has purchased the entire stock of the previous year's vintage which had won some international competition. It was Cline Cellars. Not a super luxe brand, but also not a cheesy one.
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- dawhizkid 8y agoCostco is great if you know what to get...meaning there's a lot of amazing deals next to things that are priced no better than anywhere else from my experience...
- dba7dba 8y agoSomeone told me the product with best margin that Costco sells is ... Kirkland toilet paper. They drove down the cost to absolute minimum simply by opening their own factory.
- shadowbannedtoo 8y agoIt clogs up plumbing. (I've been a Plumber some years when times are rough.) Just take my word for it. HN'er, "What should I buy?" Try to buy the cheap one ply stuff. (I'm typing to know one because Dong hellbanned my ip. My posts offended people? I offended know one except a thin skinned Moderator, whom emailed me unsolicited. Yea Slick--I never gave you permission to contact me. I was just trying to be honest in all my posts? Still won't kiss your ass Donger. I am coding a alternative. It will ge something between this site, and 4chan. You will have to be pretty deranged to get any petty hellbans.).
- xref 8y agoAnd it’s high quality TP, getting a lot of good reviews and lauded by Wirecutter etc online. I keep a roll on the spool for after my bidet does the real work.
- benj111 8y ago"best margins" suggests highest profit as percentages of retail price right? That sounds wrong. Toilet paper isn't a traditionally high margin thing, and I doubt they'd be able to wring out much more margin by buying the factory, or else everyone would do it. High margin products traditionally are either the luxury products, low volume products, or convenient/convenience products (chocolates by the till, sandwiches to go). Now its possible that toilet roll is their most profitable product in absolute terms. Everyone needs toilet roll so they probably sell a lot.
- madengr 8y agoI still buy the Scott brand. It’s cheaper than Kirkland.
- ratling 8y agoYou could text replace Kirkland Signature with Amazon Basics in this article and it's the same story. Housewares are commodities. In most cases brands mean a whole lot of nothing until you get up into the bespoke option price point (and lots of things just don't have that at all).
- adontz 8y agoI had a conversation with Amazon manager two days ago, exactly about AmazonBasics and how unfair it is to competitor vendors. And his answers was "Our vision is that lower price is good for customer". To be honest, I don't buy it.
- mcny 8y agoPerceived lower prices is good for Amazon.com. If customers think amazon.com has great value, they will buy more at amazon.com without thinking which allows them to sell their marketplace to vendors because if you're selling something you want to be where the buyers are. If Amazon.com can convert those merchants to use Amazon.com ware houses and prime shipping, it can help create a self-sustaining ecosystem (sorry I hate this word as well but I can't think of a better one).
- hopler 8y agoI lost faith in Amazon when I heard a presentation about building an automated price matching (increasing) system to "prevent leaving money on the table" by charging lower prices than competitors when Amazon already had the top search result.
- adontz 8y ago>> Perceived lower prices is good for Amazon.com. Exactly. For Amazon.
- vinay427 8y agoI definitely agree with your point, but I think there's a small distinction to be made that I see. In my experience, Kirkland Signature products have generally been rebrands or slightly modified versions of quality products by trustworthy brands that cost more in their OEM packaging. This is perhaps true with many Amazon Basics items, but it doesn't seem as consistent as it does with Kirkland Signature's lineup. I would feel comfortable buying a KS product and assuming it is of good quality, even without Costco's notably flexible return and refund policy as a backup.
- fmajid 8y agoWhat's confusing is that the Kirkland Signature brand is also put on items that are not own-brand, e.g. the big Jelly Bely canisters have dual "Kirkland Signature" and "Jelly Belly" branding.
- andyjsong 8y agoMy guess is that Jelly Belly has very strong brand recognition, so it made sense to keep them on the label. A collab if you will: Kirkland Signature x Jelly Belly
- dontbenebby 8y agoGNU/Kirkland
- thomasswift 8y agoKirkland x Einstein bagels
- Dowwie 8y agoKirkland Ito En green tea is delicious. These are great brand partnerships. Reputable products get sold at wholesale volumes.
- paulie_a 8y agoIf it doesn't say jelly belly, i am not but buying it. That's how inferior I see every other manufacturer.
- jumbopapa 8y agoSame goes for their coffee. If you read the package it says something about Starbucks.
- rebuilder 8y agoFirefox on Android asked permission to record audio and video when I visited that article. Seems pretty suspect.
- greggyb 8y agoI've noticed the same and posted an Ask HN about it: https://news.ycombinator.com/item?id=19476673 https://news.ycombinator.com/item?id=19476673
- bitxbit 8y agoWhat’s missing in this discussion is how much marketing and ad dollars figure into pricing of goods especially among goods that are hard to differentiate. Instead of thinking how much cheaper Kirkland (and other private labels) is compared to branded goods, we should really think about the economic excess of marketing in general.
- tgb 8y agoHere's my pet conspiracy theory: cigarette companies in the US colluded to get themselves banned from marketing, thereby saving themselves tons of money. Some research suggests marketing mostly just shifts spending from one brand to another rather than from one product category to another, so the whole industry is better off not marketing but without a government enforcing that, any individual company could defect from the pact. And marketing was a way for cigarette companies to subsidize things like public transportation and was arguably their only positive contribution to society apart from taxes. In reality, I don't think this adds up (why haven't they done the same in the EU and other jurisdictions? didn't they also have to pay massive fines? etc.).
- Waterluvian 8y agoThat's a fascinating theory that I'll be mulling about for a while. My immediate thought is that smoking overall is falling and falling, so maybe advertising does more than shift brand loyalty of existing customers. Semi-related: I was pretty convinced that smoking was at maybe 5% in Canada based on my observation that almost nobody where I've worked and gone to school smoked. Turns out it's closer to 25%, which was shocking. I came to realise that smoking must be very very concentrated among specific demographics as to insulate me from it. Got me thinking about how my perception of advertising for smoking may also be very very off.
- gotocake 8y agoMy immediate thought is that smoking overall is falling and falling, so maybe advertising does more than shift brand loyalty of existing customers. Smoking in the United States and other developed nations is declining, but it’s rising worldwide. Tobacco companies simply shifted their focus to poorer, less educated nations and they’re taking in the money. https://en.m.wikipedia.org/wiki/List_of_countries_by_cigarette_consumption_per_capita https://en.m.wikipedia.org/wiki/List_of_countries_by_cigaret... While smoking rates have leveled off or declined in developed nations, especially among men, in developing nations tobacco consumption continues to rise.
- 0db532a0 8y agoThis is off-topic.
- sergiotapia 8y agoWithout Kirkland, we would probably not be Costco members. From boxers, to belts, to shorts, to soap, to makeup removal towelettes, to white tshirts, to coffee - my family buys the stuff because we know it's good quality and not overcharging us. My parents love to make fun because one day without realizing I was wearing shoes, socks, shorts, t-shirt and belt; all kirkland. Never seen a brand like it and they don't do marketing whatsoever. It's pretty crazy!