Originally Posted by JOD
Originally Posted by CKN
What's a "fair wage" for dragging an item over a scanner?
The grocery stores put up with this over paid non-sense for years-until they finally agreed to a Union Contract that allowed them to bring in newer employees at lower wages.
It's enough that I don't have to subsidize them with food stamps even if they're working full time...
Clearly, Costo's plan of paying working a living wage is working for them. In a world where brick and mortar is dead, they're thriving--despite paying a lot for people to run a scanner...
The only thing that keeps CostCo in business is membership fees. Otherwise they would be out of business.
How Costco Actually Makes Money
The everything-in-bulk store offers customers great deals. That's great for customer satisfaction, but it means the real money needs to come from somewhere else.
Motley Fool Staff
Motley Fool Staff
Updated: Apr 14, 2019 at 4:02PM
Published: Feb 13, 2019 at 10:49AM
Everyone has a favorite Costco (NASDAQ:COST) item. Some love the four-pound bags of Kirkland trail mix; others can't make a trip to the warehouse retailer without getting a $1.50 hot dog and soda combo in the food court.
No matter the product, it seems Costco manages to give its customers exceptional value on pretty much every item in the store. That's great for customers, but investors might wonder: "OK, but how does this company actually make money, then?"
Check out the latest earnings call transcript for Costco.
We're here to answer that question with a video from our YouTube channel! (A full transcript follows the video.)
Editor's note: The paid members count in the video is in thousands.
Narrator: You might think that Costco is your average retailer... but it's not.
The "everything in bulk" store sells cleaning supplies, jeans, pet food, and anything in-between, but Costco doesn't actually make much money on the merchandise it sells.
In this video, we're going to break down exactly where the cash really comes from for Costco.
According to the company's 2018 results, it sold $138 billion in merchandise -- that's a lot of Kirkland brand trail mix and discount prescription glasses.
The products they sold cost the company $123 billion, leaving $15 billion for the business.
BUT WAIT! We also have to account for all the company's retail employees, pallet trucks, and store overhead expenses that enable Costco to sell those goods and give away those sweet, sweet free samples.
All those costs combined totaled nearly $14B.
So we've got:
Sales of $138 billion.
Cost of goods sold of $123 billion.
And selling, general, and administrative costs of $14 billion.
That leaves us with just $1 billion dollars... but the company reported over $3 billion in net income for the year. So where's the extra money coming from?
Costco's real source of income: its memberships.
In order to shop at Costco, you need to be a member, and annual membership costs either $60 or $120, depending on the benefits an individual or business chooses.
Those membership fees add up over time: In the company's 2018 results, they said they collected $3.1 billion in membership fees.
So-yes-you are paying for that person to scan your items. So you can pay food stamps or membership fees. The purchasing of items in a warehouse DOES NOT pay for the cashier dragging items across a scanner. It's right from the company's earning statement.
https://www.fool.com/investing/2019/02/13/how-costco-actually-makes-money.aspx