Costco Corp.: American Membership System

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Costco Corp. is an American Membership-only warehouse club. It provides a wide selection of merchandise. The first Costco was opened in Seattle, and Costco later became the first company ever to achieve $3 billion in sales in less than 6 years. Headquartered in Issaquah, Washington, USA, Costco is the second largest retailer in the world. Also, it is the largest membership warehouse club chain in the United States. Besides United States, Costco has being expanding its business all over the world, controlling 200 warehouses in Canada, United Kingdom, Australia, and five other countries and region. The main rival of Costco is Walmart. Walmart is an American multinational retail corporation that runs a chain of supermarkets, grocery stores and…show more content…
One possible thought would be “Why should customer should purchase from our store?”. A company should list all the benefit it originally proposed to provide to the customer, especially the customized services that have built strong bond with customer. By these services, the customers receive more value than they expected to receive.. Compared to Walmart, one of the most significant characteristics of Costco is its membership system. Costco is exclusive to its paid member, and it provides two kinds of membership for now. “Gold Star Membership” costs 55 per year, which includes a free household card and it functions as a free passport at all Costco locations worldwide. The “Executive Membership” is a higher level of membership that comes with a 2% purchase return and additional services. As a member, customers receive discount on variety of products, and coupons are always available and easy to apply. To those who are executive member, an additional 2% discount will be added to the original discount. Also, Costco`s Return policy is also favorable to customers. Merchandise such as electronics, wine, cigarette and even diamond can be return easily. The return policy greatly protects the customers` rights and makes them feel that their rights have been valued. Once when customers feel safe throughout the purchase, they might have a great chance purchasing again. Moreover, Costco provide a wide…show more content…
What makes them different from their competitors and earn customers` favor? First of all, a lower price is always the primary consideration as a customer. It is not a problem for Costco since Costco`s sales mode is bulk sale. Bulk sale can save a large amount of operating cost, such as display cost, transportation cost, not only creating more space to decrease the price, but ensuring a high inventory turnover. The effort of Costco is more then just focusing on bulk sale. In year 1966, Costco established its private-label brand, Kirkland signature, and it strengthens Costco`s price control ability. Different from selling products from various vendors, Private-brand is totally controllable, from production to sales. A large amount of cost comes from vendor. If a store can skip the step of negotiating with vendors, it can further decrease the price. Additionally, while Costco covers a wide variety of merchandise, it strictly limits the number of different items under each category. Costco applies the Stock Keeping Units (SKU) individually and sets a combination of products at different levels for sale (Evans & Satchu, 2009). A SKU system enable Costco a lower operating cost as well as in-store management cost. The lower price comes with selected goods is definitely attractive to customer. Selected item and their price are listed on the chart 1, from which it is

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