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> Cosco doesn't make the goods they sell - they are just being an intermediary between you and the the manufacturer. An intermediary that takes a 60+% fee for t
by hk__2 4y ago
> Cosco doesn't make the goods they sell - they are just being an intermediary between you and the the manufacturer. An intermediary that takes a 60+% fee for their work.
It can take such "fee" because it’s so enormous that it can negociate prices in a way you couldn’t, as well as handling the logistics and having lots of different products at the same place. It’s not "just an intermediary", it’s an intermediary that adds value.
If you want to eat a yogurt, would you prefer paying $4 a pack of four at Costco or $1500 for 4000 yogurts you have to transport from the manufacturer to your home with your own truck?
- otikik 4y agoThose are not the only two options available. A locally produced yogurt would cost more than in Costco, but not that much more. Maybe $20 a pack, with a deposit for the glass, and you would get it at your door with your milk.
- hk__2 4y agoI don’t think this invalidates the point that Costco is not "just an intermediary".
- lotsofpulp 4y agoWould it? You are welcome to start the business and try to compete with Costco/Chobani/Dannon/etc
- otikik 4y agoThanks for the kind offer, but when I move on from computer stuff I will start a woodworking business, as is tradition.
- meowkit 4y ago> It can take such "fee" because it’s so enormous that it can negociate prices in a way you couldn’t So what's the solution to this problem? In one way I think this could be framed as rent seeking via economies of scale.
- hk__2 4y ago> So what's the solution to this problem? There’s no problem; Costco is an intermediary that brings value and so it takes its cut. Why do people buy from Amazon, who is also "just" an intermediary? Because you can buy millions of different products from one single place instead of having to go see each manufacturer where you wouldn’t be able to buy individual items anyway. This situation is a lot more effective than forcing each manufacturer to develop its own customer-facing business with all the costs and logistics that go with it.
- int_19h 4y agoThe logistics part is value that Costco added by itself. They're entitled to fair compensation for that part. But the "so big it can strongarm suppliers into pricing" is not value added - it's value taken from someone else.
- hk__2 4y ago> But the "so big it can strongarm suppliers into pricing" is not value added - it's value taken from someone else. It’s money taken, not value. And giving you the customer the ability to buy something cheaper is value (for you, at least).