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Try and stop me. I LOVE Costco. Basically, when I buy something at a regular store, I'm shocked at the recent inflation. But at Costco, most things have barel
by FredPret 3y ago
Try and stop me. I LOVE Costco.
Basically, when I buy something at a regular store, I'm shocked at the recent inflation.
But at Costco, most things have barely budged at all in the past few years. And that's starting at a lower base as well - at the moment it's simply nuts how much cheaper things are there.
In fact, if you look at their financial statements, their entire profit equals their membership fee income - this means you're buying things at cost price on average. And Costco is known to be brutal to their suppliers, using their market position to force lower prices and larger pack sizes onto the manufacturers.
They don't sell everything though - there are some items you have to buy on Amazon or a regular grocery store. But almost (not entirely) every time that Costco sells something, it's the best deal you can get.
Another downside is you have to buy a LOT of what you're buying. So it only makes sense if you're planning ahead somewhat, and if you have room in your fridge/freezer/garage.
EDIT: actually the main drawback is the hugeness and remoteness of the store, and the immense number of other shoppers. But again, this plays into going every couple of weeks and buying ahead. These things are inherent in their model and I accept it. I actually spend less total time shopping now because I do all of it in 60-80 minutes every two weeks.
Another edit: none of this means that the quality is any lower. Somehow, they're delivering excellent meat, produce, and more at a fraction of the cost.
Maybe I should buy shares in this company. They barely have a profit margin though.
- S_A_P 3y agoI have a relatively large family and the quantities required still don’t make sense for most items in my case. However the gas prices keep me a member.
- IAmGraydon 3y agoI shop there for only my wife and I and it’s perfect. I’m curious - what products come in quantities that don’t make sense?
- mcphage 3y agoI get that they sell a lot of things, but buying your wife there? That strains the bounds of credulity.
- tomcam 3y agoObvious trolling, so I’ll spell it out for you. IAmGraydon and I live in the same neighborhood. Obviously, Costco only sells wives in packages of 8 (Kirkland brand). We went in with 6 other friends on this one.
- Boogie_Man 3y agoI tried to rob a Costco, but my plan failed because I didn't bring eight guns.
- mcphage 3y agoThat does sound great for you, but I'm not in a polycule, and I don't think I've got room in my pantry for the spare wives. I guess it's just not for me.
- taftster 3y agoI mean, they have hosted weddings at Costco before. Next step, bride or groom ordering service? Wonder how they handle returns in this scenario. Probably 90 days like electronics.
- FredPret 3y agoThey also sell fridges, freezers, and shelves ;)
- Paul-Craft 3y agoDo they sell space to put that stuff? When you're talking "relatively large family," I suspect that's actually the real bottleneck.
- flatline 3y agoCostco travel alone has saved me hundreds if not thousands of dollars in rental cars over the past year. Easily 40% cheaper than the competition.
- dylan604 3y agotell me more. are you just getting a discount at the normal rental places, or do they have their own? i was not aware of the rental option.
- flatline 3y agoJust another third party booking service. Last month a rental from Budget through Costco travel for a six days in CA was around $340. The same thing on rentalcars.com was over $500.
- TylerE 3y agoWonder how much of that is CostCo members generally being higher income/lower risk.
- dylan604 3y agoI mean, they let me in as a member. I can tell you I'm not doing anyone any favors in the lowering risk category
- TylerE 3y agoI mean, you joke, but you've shown ability to get to the store, fill out an application, pay the $200 or whatever... that at the very least means you are probably not in, say, the 5% worst risk category. Damages that can be caused to something like a hotel room or rental car are essentially unlimited.. avoiding the worst risks is really good. Below average is fine, you just want to avoid horrific.
- taftster 3y ago
- tcbawo 3y agoProduct curation at Costco is another key aspect. If Costco sells it then it’s a decent product, they stand behind it, and the product is a good value. I trust them not to pass off bad merchandise on me.
- kgermino 3y agoThis is the biggest reason I love Costco. If you need something they're selling you'll only have a couple options, all will be at least decent, and it's usually obvious which one's for you. E.g. I needed a shredder. There were two, a smaller one and a bigger one. I got the smaller one without needing to think or comparison shop because I know it will work for me (absolutely no issues in 6 years) and it's a decent to great price. On the very rare occasion I get a dud, they happily take returns. Last winter I returned a two year old fridge and they didn't even ask for evidence of my issue
- kredd 3y agoHaving a Costco downtown and 15 minute walk from me is the best experience a human can get. I just stroll to get one item when I have nothing better to do.
- kgermino 3y agoOh what I'd do for that. Even just in a decent biking distance would be amazing. Ours are all in the distant suburbs. What city has one downtown?
- kredd 3y agoVancouver, Canada!
- jfim 3y agoSan Francisco has one close to the mission and SoMA area.
- doublerebel 3y agoSeattle has one in Sodo. With a car wash.
- dylan604 3y agoThis must be amazing. There is no Costco within 20 minutes in a car near me.
- kredd 3y agoYeah, it’s always funny to explain it to outsiders, but I wish it was ubiquitous everywhere. Every time I think about moving away one of the things that pops up in my head is — “ah, but I will miss dt Costco!”.
- toomuchtodo 3y agoIf only Costco built condo buildings above them. A missed opportunity to sell condos at Costco!
- IAmGraydon 3y agoI buy literally everything I can at Costco. All my groceries, paper products, detergents, batteries, light bulbs, tires, appliances, and even many electronics. I even booked a vacation to Saint Lucia through Costco Travel and it was flawless. I have an executive membership, which is $120/year, but also gives me 2% back on all purchases. I spend enough there every year that it completely covers the cost of membership. I currently spend the same there every month as I did 5 years ago. Inflation has barely touched it except for a few items like beef and fish, which have recently come back down in price. I don’t understand the complaint some people have that it’s hard to shop there because quantities are too large. I use everything before expiration and end up throwing away very little. For short expiration item like meat, just use your freezer.
- rahimnathwani 3y ago"if you look at their financial statements ... you're buying things at cost price on average" Not quite. Costco's gross margin is ~12% of revenue. That means their average markup (including revenue from membership fees) is over 10%. If membership fees are about 2% of revenue, and other income (e.g. commission from the vendors near the exit), then Costco's markup is in the 8% to 9% range. If we were buying things at cost price on average, then Costco would not have enough money to pay for rent, staff etc.
- FredPret 3y agoI mean true cost, not just COGS. If we all had to buy straight from the vendors, we’d have to pay the COGS as well as replicate the functions you mention.
- rahimnathwani 3y agoIt sounds like you're saying that it's preferable to buy from a retailer whose net profit (as a % of sales) is as low as possible. Because that means the price you pay is as low as possible (relative to what you call 'true cost'). If that's the case, then you could do even better: don't shop at profitable retailers. Only shop at places with really low net income. Better still, shop at places that are so badly run that, even though they have high gross margins, waste so much money on overheads that they lose money overall. (I'm not suggesting Costco is poorly run, or is a bad place to shop. Just trying to illustrate why focusing on total costs instead of COGS can lead to absurd conclusions.)
- lotsofpulp 3y ago> If that's the case, then you could do even better: don't shop at profitable retailers. Only shop at places with really low net income. What does low net income have to do with anything? Profit margin tells you how much the middleman is keeping. The lower the profit margin, the lower the prices, for something as fungible as retailing consumer goods. A business needs at least a minimal profit margin to survive a little volatility. That is why Walmart/Costco/Kroger have 2% profit margins. If anyone could deliver those goods for cheaper, they would, but they probably cannot as evidenced by competitors going out of business. >Better still, shop at places that are so badly run that, even though they have high gross margins, waste so much money on overheads that they lose money overall. Businesses that lose money tend to get shut down by the owners, since people generally do not like to lose money.