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A random point to also be aware of: Costco makes practically no money off of what they sell. Costco makes their money from membership fees. Because membership
by pm24601 12y ago
A random point to also be aware of: Costco makes practically no money off of what they sell. Costco makes their money from membership fees.
Because membership fees are so important, Costco has to listen to the members so I would hazard a guess that members have not asked in sufficient numbers.
- cat9 12y agoThis. It's likely deliberate optimization. They want to encourage a larger average order size & higher revenue per customer. You pay for a membership, making you more committed to shopping there. Then they don't optimize the experience to support small orders, so you might as well get a few more things as long as you're there.
- barefootford 12y agoNope, I don't think that's true. At least that's not what they told employees. They told us stores make almost identical money from the margin of most items (I think it was something like almost everything is marked up 20%) and yearly membership fees.
- gesman 12y agoSome items might even be at a loss for Costco ($1.99 for pack of 36 water bottles?) but overall I think it's not zero margin enterprise. Some items or services are definitely carrying healthy profit and behind the scenes kickbacks from the vendor (small business payment systems, other recurring services sold to customers, very large price ticket items like furniture and cars)