Costo lost money without membership fees

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Costco has 81 million members in 2015, Gold Star and Business members pay $55 a year, Executive members pay $110 a year. The minimum membership fee Costco take in last year was $4.455 billion (assume that no one was paying Executive membership fee of $110).

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For the fiscal year ending on Aug 31, 2012, the company's sales totaled $97.062 billion, with $1.709 billion net profit.


https://en.wikipedia.org/wiki/Costco

Assume that Costco had 30% less members in 2012 than 2015, 56.7 million member paid no less than $3.1 billion in membership fee in 2012.

This means Costco had operating lost of $1.4 billion in 2012.

Many items at Costco are much cheaper than anywhere else, Amazon included. The biggest saving is gasoline, usually Costco sells gas at 10-30 cents cheaper than other Top-Tier stations within 2-3 miles radius.
 
The CEO(I believe, could have been some other big wig) said that years ago in a doc I watched. He's in business to sell memberships. They're trying to break even on everything else.
 
They are not breaking even on all their products and their prices are not so great on a lot of things either. I will be looking for a mattress there this week i will let everyone know how good their prices are. My daughter has a membership there she got free from one of my engine customers a few months ago before i sold my shop. The average person that shops there thinks they are getting great deals on everything, some deals are ok but they are still not wholesale by any means..
 
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I will be looking for a mattress there this week i will let everyone know how good their prices are.


Check out the memory foam ones they have. Even the lower priced ones are VERY good and equivalent to and IMO often better than a conventional mattress costing 3 to 4x as much. I would not believe it if I had not experienced it.
 
Costco is a great place to shop partly because of the helpful and friendly employees. Costco pays them $20/hr plus benefits and treats them well on the job.


WalMart would be better off simply shutting down the Sam's Club stores as they will not make the changes needed to improve the Sams Club store, nor the WalMart stores for that matter.
 
I purchased a Rolex watch for my wife from Costco about 10 years ago. I needed a link and called a local jeweler that carried the Rolex brand asking about adding the link. He asked me where I purchased it and after hearing it was Costco he said something I could not understand and hung up on me.
 
Costco doesn't always have the best price, but they always seem to have the best value. Other stores might sell an item for slightly less, but the quality at Costco is going to be better. I've found their Kirkland items to generally be better quality than the name brands and goods for the home are extremely high quality, you just don't have a huge selection to pick from.
 
Originally Posted By: Vern_in_IL
WalMart would be better off simply shutting down the Sam's Club stores as they will not make the changes needed to improve the Sams Club store, nor the WalMart stores for that matter.


or better yet, sell the Sam's Clubs to Costco
happy2.gif
 
They also have a lot of free services (like vacation packages where members get extras, auto purchase programs, etc). Not to mention I think they sell gas at cost, at least they can't be making much profit on it. According to our store they do a daily survey of all gas prices in a certain radius and their price is the lowest minus $0.10.
 
My close friend and mentor took Costco public in the 80's. It's a sound business model and they take care of their employees. The membership is smart too, keeps the riffraff out.
 
Originally Posted By: OneEyeJack
I purchased a Rolex watch for my wife from Costco about 10 years ago. I needed a link and called a local jeweler that carried the Rolex brand asking about adding the link. He asked me where I purchased it and after hearing it was Costco he said something I could not understand and hung up on me.

Did you talk to Costco about the link for Rolex watch ?

81 million paying members is a lot, this tell me Costco have very good customer service.
 
Originally Posted By: Gasbuggy
The membership is smart too, keeps the riffraff out.


Doesn't keep me out. If I have the inclination, I can tag along as a guest of a member.

For the amount I'm likely to spend there, paying the membership would be uneconomic.

GF was a member, but I was able to persuade her to stop it, using The Power of Arithmetic.
 
Their business has also increased by them accepting EBT cards for many years. I asked if the membership fees were waived or reduced for these folks and Costco said no.
 
Originally Posted By: HTSS_TR
Originally Posted By: OneEyeJack
I purchased a Rolex watch for my wife from Costco about 10 years ago. I needed a link and called a local jeweler that carried the Rolex brand asking about adding the link. He asked me where I purchased it and after hearing it was Costco he said something I could not understand and hung up on me.

Did you talk to Costco about the link for Rolex watch ?

81 million paying members is a lot, this tell me Costco have very good customer service.


I'm not sure what you're trying to get at here.
This is more about the local jeweler looking for a particular kind of customer who are price insensitive. He's probably had "costco" customers before and not worth his time for him to service them.

It would be the same as even if you are a millionaire, if you dressed shabbily and showed up at a trendy new york restaurant they may not serve you or if they do, rush you out, and for good reason, because your stature and behavior is unsaid communication that you are a cheapskate millionaire.
 
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Originally Posted By: HTSS_TR


Many items at Costco are much cheaper than anywhere else, Amazon included. The biggest saving is gasoline, usually Costco sells gas at 10-30 cents cheaper than other Top-Tier stations within 2-3 miles radius.


This is only true if you are looking for cheaper substitutions for item. You may feel this way, because costco usually sells products that are on the edge between mid and upper grade.

Since this is an oil forum, it's like saying mobil1 is a ripoff because get mobil1 supersyn is cheaper locally on this week's circular.

The bigger problem is the bulk purchases, if you cannot consume the bulk you may either waste a lot of item, or you buy items with features that you don't need.
 
Originally Posted By: tenderloin
Their business has also increased by them accepting EBT cards for many years. I asked if the membership fees were waived or reduced for these folks and Costco said no.


They get the smart ones. Where the guy works a good job and the permanent girlfriend with all the kids gets the free taxpayer provided stuff. They live better than half the honest working people.
 
Costco's SOP is to provide high quality items at below average prices. Likely not a good solution for singles but for couples even with no kids the savings to be had over a year more than pay for the membership. I view Costco membership (assuming a person is lucky enough to have a Costco in their town) as a test of basic consumer intelligence.
 
Originally Posted By: HTSS_TR
Originally Posted By: OneEyeJack
I purchased a Rolex watch for my wife from Costco about 10 years ago. I needed a link and called a local jeweler that carried the Rolex brand asking about adding the link. He asked me where I purchased it and after hearing it was Costco he said something I could not understand and hung up on me.
Did you talk to Costco about the link for Rolex watch ?

81 million paying members is a lot, this tell me Costco have very good customer service.

Originally Posted By: raytseng
I'm not sure what you're trying to get at here.
This is more about the local jeweler looking for a particular kind of customer who are price insensitive. He's probably had "costco" customers before and not worth his time for him to service them.

It would be the same as even if you are a millionaire, if you dressed shabbily and showed up at a trendy new york restaurant they may not serve you or if they do, rush you out, and for good reason, because your stature and behavior is unsaid communication that you are a cheapskate millionaire.

He bought his wife a Rolex watch from Costco, he needed a link for that watch for what-ever-reason, I just suggested contact Costco jewellery dept to see if they can provide anything.
 
I contacted Costco headquarters and they sent me to a local jeweler that took care of the link for free.

Also remember that the Costco model comes from Sol Price and Price Club that started in San Diego, California. The joke at Price Club was that when an executive retired they hared a new janitor and everyone else moved up one notch. Sol Price promoted from within and always took good care of the employees. Then, you could not become a manager without having worked in the store for a period of time.

I worked there when they opened up the first store. When we finished working we were tasked with walking up and down the isles making purchases of non perishable items and going threw the cash register line to make the store look busy. Then at night we put all the stuff back when we worked at unloading the trucks and stocking the shelves.

One of the shoppers would sometimes be Sol Price, himself. He always wanted to know what shoppers thought about the store, what they liked and did not like. When employees went out of their way to help customers especially out in the parking lot he noticed.

If Sam Walton was alive today his Walmart stores might look more like the Price Club model instead of a Chinese dollar store.
 
The savings in gasoline costs pay for the membership. The membership is $55 per year, but I save $70 per year in gasoline costs. My only gripe about the place is that the employees are some of the most stuck up snobbish people you'll ever meet. If you ask them a question about where something might be, they look at you with amazement that you actually had the audacity to confront them with such a trivial question.
 
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