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> people wasting money on these tablets subsidizes lower prices on other products at Costco for me. I don't think that's true in any way. If anything, they are

by HWR_14 4y ago

> people wasting money on these tablets subsidizes lower prices on other products at Costco for me. I don't think that's true in any way. If anything, they are crowding out products you might be more interested in.

lotsofpulp 4y ago
From what I understand, Costco aims for their net income to be equal to their membership revenue. And so the sum total of all things sold is equal to all the costs. And so if they are getting a high margin on some items, such as fake medicine which typically have huge markups, then this would allow them to have near zero or even negative margin on other items (which I presume are popular staples like milk/eggs/etc). With the cash back rewards for executive membership, I do not even end up paying for my membership, so I assume items with higher markup are subsidizing that also.
- HWR_14 4y ago
  > which I presume are popular staples like milk/eggs/etc I don't know why those would be what is subsidized. Why wouldn't Costco just cut the prices on the homeopathic medicines to make their target 3% or whatever.
  - lotsofpulp 4y ago
    Because milk/eggs are what draws people into the store. And their famous rotisserie chicken or hotdog. Standard retail tactic. Once at the store, people might decide to buy things they did not need, or cost more than elsewhere, such as a 6 pack of knives when they only needed one, or turmeric tablets. https://en.wikipedia.org/wiki/Loss_leader https://en.wikipedia.org/wiki/Loss_leader
    - HWR_14 4y ago
      The rotisserie and the hodogs are clear loss leaders (or maybe just "almost no profit" leaders). I don't believe Costco treats milk or eggs as loss leaders. Google'd comparison sites show that Costco milk, for instance, is more expensive than Aldi or Trader Joe's. And eggs may be cheaper per dozen (maybe) than Trader Joe's but are still more expensive than Aldi's. And you have to buy them in larger batches.

by HWR_14 4y ago

lotsofpulp 4y ago

From what I understand, Costco aims for their net income to be equal to their membership revenue. And so the sum total of all things sold is equal to all the costs. And so if they are getting a high margin on some items, such as fake medicine which typically have huge markups, then this would allow them to have near zero or even negative margin on other items (which I presume are popular staples like milk/eggs/etc). With the cash back rewards for executive membership, I do not even end up paying for my membership, so I assume items with higher markup are subsidizing that also.

HWR_14 4y ago
> which I presume are popular staples like milk/eggs/etc I don't know why those would be what is subsidized. Why wouldn't Costco just cut the prices on the homeopathic medicines to make their target 3% or whatever.
- lotsofpulp 4y ago
  Because milk/eggs are what draws people into the store. And their famous rotisserie chicken or hotdog. Standard retail tactic. Once at the store, people might decide to buy things they did not need, or cost more than elsewhere, such as a 6 pack of knives when they only needed one, or turmeric tablets. https://en.wikipedia.org/wiki/Loss_leader https://en.wikipedia.org/wiki/Loss_leader
  - HWR_14 4y ago
    The rotisserie and the hodogs are clear loss leaders (or maybe just "almost no profit" leaders). I don't believe Costco treats milk or eggs as loss leaders. Google'd comparison sites show that Costco milk, for instance, is more expensive than Aldi or Trader Joe's. And eggs may be cheaper per dozen (maybe) than Trader Joe's but are still more expensive than Aldi's. And you have to buy them in larger batches.