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Bear in mind, I have no idea how wholesalers work in this day and age. But once upon a time, a wholesaler like Costco sold stuff at cost (e.g. they charge what
by AdmiralAsshat 6y ago
Bear in mind, I have no idea how wholesalers work in this day and age. But once upon a time, a wholesaler like Costco sold stuff at cost (e.g. they charge what they paid the supplier for the product), and their revenue derived from the annual membership fees. So it's not in Costco's interest to start selling Kirkland Brand Extra Virgin Olive Oil at Safeway, because it wasn't a profit center to begin with. The whole point of selling their own branded product was:
a) To reduce costs by controlling the entire means-of-production
b) To ensure quality control on the product and build faith in the brand, which in turn
c) Pulls people into the store, forcing them to buy a Costco membership if they want the product.
- gamblor956 6y agoWith regards to (a), Costco doesn't do that. Their entire Kirkland line is white-label products, excepting their pizzas which use dough made by regionally locally bakeries. They do have employees oversee (b), but they don't oversee the actual production; they conduct random inspections of shipped products. For example, Kirkland coconut water is simply white-label Vita Coco, and the made by label indicates it is packaged for them by the same company that produces Vita Coco.
- e_y_ 6y agoI'm not sure about the old days, but I believe Costco has stated they cap their markup at 15% -- which along with membership fees pays for employee salary, operations, and profit. I'm guessing that's overall and some products are more profitable while others (like their rotisserie chicken) are subsidized.