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I looked at Costco's financials a few years ago and their total annual profit is (was?) approximately equal to their total annual income from membership fees.
by Paperweight 7y ago
I looked at Costco's financials a few years ago and their total annual profit is (was?) approximately equal to their total annual income from membership fees.
- zhoujianfu 7y agoI believe that's on purpose... they charge like 3% more than cost, which covers all their operating expenses, and then the membership fees are their annual profit.
- rafiki6 7y agoThat is their whole business model. Their growth is entirely predicated on more members joining/renewing this year than they had in total in previous year. And frankly, it's absolutely worth it. You pay for something like Prime, and before they expanded it to include Video and Music, you were essentially paying for slightly faster delivery and less things to purchase upfront. Costco's model is all about giving you access to the best VALUE. They do really sell very very close to wholesale prices and many things are sold at cost. Will they ever be the size of Amazon or Walmart in revenues? Probably not. That's not their goal. By having a membership, they are mostly targeting a demographic with something above $0 spending money. Costco is all about slow and sustainable growth, although who knows. Their target market is quickly dwindling so they will eventually need tor raise membership fees to increase revenue and profit.
- davidmckenna 7y agoRelated tweetstorm I came across: https://twitter.com/investing_city/status/1179974257779982336 https://twitter.com/investing_city/status/117997425777998233...