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Business Strategy Lessons From Costco Business Model

Costco’s strategy can be summarized as primarily a selection of high-quality items sold in bulk in warehouses around the US and Canada, with a substantial part of its business focused on selling merchandise at a low-profit margin. Costco also uses a single-step distribution strategy to sell its inventory before it gets paid to suppliers. Costco generated almost $242.29 billion in revenue in 2023, of which $4.58 billion came from 71 million paid members.

Table of Contents

History of Costco

Here is the story of how this retail behemoth carved out its own niche in what is an extremely competitive market.

Back then, consumers paid $25 annually to purchase bulk products at discount prices in a basic, warehouse-like environment.

Price Club expanded to 94 locations across North America and by 1992, reported revenue of $6.6 billion and profit of $134 million .

The original Price Club store in a converted airplane hangar in San Diego, California, still operates to this day under the Costco banner.

Costco is founded

The first store opened in Seattle in 1983, and by the end of 1986, it boasted 17 locations, 1.3 million members, and 3,740 employees.

The subsequent company became known as PriceCostco, but consumers with a Price Club membership could shop at Costco and vice versa. Around this time, the first locations were opened in the United Kingdom and then in South Korea.

In 1994, Sol and Robert Price left the company to start PriceSmart, a warehouse chain for the Central American and Caribbean markets.

Three years later, PriceCostco became Costco Companies, Inc., and all remaining Price Club stores were rebranded.

The company also introduced its Executive Membership where members could earn a 2% reward on eligible purchases and access additional benefits.

Existing Costco locations retain many of the characteristics of Price Club stores.

Each warehouse is sparsely decorated, but the company has remained committed to low prices and also pays its employees an attractive wage.

Costco business model at a glance

Costco’s business model and business strategy can be summarized as a selection of high-quality items sold in bulk-sized warehouses around the US and Canada.

With a substantial part of its business focused on selling merchandise at a low-profit margin, Costco also had 65.8 million members in 2022.

Which generated $4.22 billion in revenue for the company in 2022.

Membership revenue has been consistently increasing over the last few years.

Costco also uses a single-step distribution strategy that allows it to sell its inventory even before it gets paid to suppliers.

Just like ALDI tries to keep its prices as low as possible, Costco managed to do so by deliberately lowering its profit margin to pass those savings to consumers.

Indeed, Costco wants to be recognized in the minds of its consumer as high-quality, low-priced stuff that you can purchase in bulk.

A few other interesting aspects of the Costco business model make it unique and make its value proposition compelling.

A glimpse at Costo’s business model few key ingredients

The value proposition of the Costco business model is quite strong. The company offers low prices to its members with a limited selection of nationally-branded and private-label products in a wide range of merchandise categories.

While those items will produce high sales volumes, they will also be driven by fast inventory turnover .

Costco offers merchandise in a few key categories:

Foods which comprise dry foods, packaged foods, and groceries
Sundries which comprise snack foods , candy, alcoholic and non-alcoholic beverages, and cleaning supplies
Hardlines, which comprise major appliances, electronics, health and beauty aids, hardware, and garden and patio
Fresh Foods comprising meat, produce, deli, and bakery
Softlines comprising apparel and small appliances
Ancillary, which comprises gas stations and pharmacy

Let’s see the critical ingredients of Costco’s business model and business strategy success, starting from how the company manages its inventory .

High inventory turnover: the key is cross-docking and single-step distribution channels

Costco generally sells inventory even before they’ve paid it. As pointed out in its annual report:

We buy most of our merchandise directly from manufacturers and route it to cross-docking consolidation points (depots) or directly to our warehouses. Our depots receive large shipments from manufacturers and quickly ship these goods to individual warehouses. This process creates freight volume and handling efficiencies, eliminating many costs associated with traditional multiple-step distribution channels .

The key ingredient to Costco’s ability to move merchandise efficiently from manufacturers to its warehouses allows the company to sell its inventory quickly.

Indeed, thanks to its memberships, Costco knows it will sell most of its inventory pretty quickly. Thus, inventory losses (shrinkage) are well below typical retail operations.

Indeed, where in a typical retail operation, there is a multiple-step distribution channel where the retailer has to move the merchandise from the manufacturer to a warehouse and then again to a retail store where it gets sold.

Costo warehouses are stores themselves. Thus, when moved the merchandising there, it gets sold quickly.

Another critical aspect is that when the merchandise arrives in bulk at Costco warehouses, they don’t need many repackaging or complex and expansive operations.

Rather the merchandise gets sold directly in bulk.

Ancillary businesses: leverage on tight margin merchandise and goods to sell primary merchandising

Ancillary businesses within or next to our warehouses provide expanded products and services, encouraging members to shop more frequently. These businesses include our gas stations, pharmacy, optical dispensing centers, food courts, and hearing-aid centers. We sell gasoline in all countries except Korea and France, with the number of warehouses with gas stations varying significantly by country. We operated 536, 508, and 472 gas stations at the end of 2017, 2016, and 2015, respectively.

One might wonder why to sell an item with a minimal profit margin like gasoline. And the answer is simple. Gas allows Costco to attract people to its warehouses.

Going to Costco is an “experience” all its way down.

From purchasing gas to stocking the car of merchandise.

The two primary ancillary businesses Costco leverages to bring as many customers back to its warehouses are gasoline and pharmacy.

Limit merchandising selection: better vendors’ agreements and payments with low prices and high quality

Our strategy is to provide our members with a broad range of high-quality merchandise at prices we believe are consistently lower than elsewhere. We seek to limit items to fast-selling models, sizes, and colors. We carry an average of approximately 3,800 active stock keeping units (SKUs) per warehouse in our core warehouse business, significantly less than other broadline retailers. Many consumable products are offered for sale in case, carton, or multiple-pack quantities only.

It’s quite counterintuitive to think of as a strength the limitation in merchandising.

Whereas other large players like Walmart and Amazon praise themselves for making available any merchandise.

Costco, like ALDI , does the opposite and praises itself for limited stock selection.

This allows Costco to get better vendor agreements, and Costco customers might be happier to have less.

Still, higher quality merchandise becomes way more accessible for Costco to manage that merchandising, which in comparison, lowers its operational burden.

Online commerce to offer what’s not available in the warehouses

Online businesses provide our members additional products and services, many not found in our warehouses. Net sales for our online business were approximately 4% of our total net sales in 2017 and 2016, respectively, and 3% in 2015.

Even though Costco doesn’t focus on online sales, it uses it to provide products and services that might not be available in its warehouses. This is a privilege that members enjoy.

Comparable sales growth as a primary business metric

Costco focuses relentlessly on sales growth by looking at a simple yet effective metric: comparable sales growth .

This is defined as sales from warehouses open for more than one year, including remodels, relocations, and expansions, as well as online sales related to e-commerce websites operating for more than one year.

The power of the membership model to create a stable revenue stream that enhances profitability

If you want to enjoy the Costco experience, there is no way out than to become a member. Indeed, t he member renewal rate was 90% in the U.S. and Canada and 87% worldwide in 2017 .

Usually, those renewals happen within six months following their renewal date. Memberships comprise four main categories

Goldstar and Goldstar executive
business, and business executive, including add-ons

Memberships have been growing at a steady rate over the years:

With almost 66 million paid members in 2022, most of them representing a good chunk of US households, membership fees increased over the years.

Why is this revenue model so interesting? For a few reasons:

with a membership model , Cosco can pass part of the saving on the merchandise to its members
at the same time, those members will spend more, and they will get more savings
Costco will enjoy higher revenue growth , and a stable revenue stream represented by its members
that revenue stream can get invested to grow Costo even further
while it will allow Costco to lower its prices further while keeping a high quality for its members

The membership revenue stream – also though it represents only about 2.26% of Costco net sales yet carries high-profit margins.

Thus, on the one hand, Costco runs its primary business on tight margins, while it relies on fifty million members (and growing) that represent a stable revenue stream for Costco business in the long run.

Bulk sizes make it easier to cross-dock while Costco sells more and members save more

Another key ingredient that it is essential to remark on about Costco’s business model and business strategy is how it sells merchandise in bulk and in larger quantities compared to other retail stores.

This has a simple yet powerful logic:

Costco gets better prices from manufacturers as it buys larger quantities
it also sells more of that merchandise compared to traditional retailers
at the same time, members get lower prices at higher convenience

Summarizing Costco’s main business drivers

A few key drivers that Cosco leverages for its future success are:

increasing shopping frequency from new and existing members and the amount they spend on each visit (so-called average ticket)
growing comparable sales by making available to Costco members the right merchandise at the right prices
provide quality goods and services at competitive prices
being perceived as a “pricing authority” (low-price and high-quality merchandise)
leverage on ancillary businesses to grow the sales of primary merchandise that carries higher profit margins (take the gasoline business, which draws members to Costco warehouses)
keep growing Costco warehouses
membership format as an integral part Cosco’s business model and business strategy with high profitability and a constant revenue stream

Business lessons you can apply to your company

On top of your primary revenue stream, build a membership base: You can offer members exclusive advantages and offers in exchange for a small annual fee. This overtime will also enhance the sales in other areas of your business as members will be willing to buy more at a more reasonable price.
Sell larger quantities at a lower price: if you sell a physical good or an intangible service, you can sell them at higher volumes for a more reasonable price. This will deliver more value to your customers while allowing you to get more sales.
Provide ancillary goods or services to sustain the sales of primary goods or services: we all like to discuss optimizing our business operations. However, you need to lose money on something else to make money. In a way, this is a variation of the razor and blade business strategy . On the one hand, you sell a service where you don’t make money; on the other, you sell a complementary good or service with high margins. This strategy can be applied pretty much to any business. For instance, imagine a digital agency selling a website design at a meager price by making no profit on that. It will sell complementary digital marketing services that instead have a high-profit margin.
Use a single-step distribution strategy : distribution is crucial to any business’s success. Rather than make it complicated, try to simplify it to reduce the number of steps a service or product takes before it gets to the final consumers.

Key Highlights

Business Model : Costco’s business model revolves around offering a selection of high-quality items in bulk-sized quantities through warehouse-style stores. The company focuses on selling merchandise at low-profit margins and relies heavily on its membership model for revenue.
History : Costco’s roots trace back to Price Club, founded in 1976 as a warehouse store catering to business customers. Costco was founded in 1983 by Jeffrey H. Brotman and James D. Sinegal, following a similar warehouse-style approach.
Merger : Price Club and Costco merged in 1993, creating a natural fit due to their similar business models. The merged entity became PriceCostco, later rebranded as Costco Companies, Inc.
Kirkland Signature : Costco introduced its private label brand , Kirkland Signature, in 1995. This brand has become highly successful, accounting for a significant portion of the company’s sales.
Inventory Management : Costco employs a single-step distribution strategy that allows it to move merchandise efficiently from manufacturers to warehouses. Cross-docking consolidation points play a key role in this process.
Limited Merchandise Selection : Costco limits its merchandise selection to fast-selling models, sizes, and colors. This strategy helps the company negotiate better vendor agreements and manage its inventory more effectively.
Ancillary Businesses : Costco leverages ancillary businesses like gas stations and pharmacies to attract more customers to its warehouses, enhancing the overall shopping experience.
Membership Model : Membership is central to Costco’s strategy . Members pay an annual fee to access the store, and the high membership renewal rate provides a stable revenue stream for the company.
Bulk Sizes and Value Proposition : Selling items in bulk quantities allows Costco to negotiate better prices with manufacturers and offer cost savings to its members. The company focuses on providing high-quality products at lower prices.
Comparable Sales Growth : Costco’s primary business metric is comparable sales growth , which measures sales from warehouses open for more than a year. This metric reflects the company’s success in attracting and retaining customers.
Online Commerce : While Costco’s primary focus is on its physical warehouses, it also uses online commerce to offer products and services that may not be available in-store.
Expansion and Membership Growth : Costco’s strategy includes ongoing expansion, increasing membership base, and enhancing shopping frequency and spending per visit.

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Costco’s Mission, Business Model, Strategy & SWOT

Costco Wholesale mission, business model, strategy, SWOT elements of internal and external analysis

Costco Wholesale Corporation’s case shows that the business continues to grow and expand. The company now has operations in overseas locations, such as Taiwan. The firm is among the biggest retail organizations in the world today. As a retail firm, Costco depends on consumer purchasing capacities. Consumer perceptions also have a significant impact because competition is high in the retail market. Competition involving other retailers, like Walmart , is especially notable. Costco must maintain competitive advantage to ensure long-term viability. At present, the ability of this company to continue growing and expanding is based on its affordable quality goods and services.

Costco Wholesale uses its business model to follow its mission statement. However, the internal analysis elements (strengths and weaknesses) and external analysis elements (opportunities and threats) show that Costco’s managers must formulate new strategies for sustained growth and development of the firm.

Costco’s Mission, Business Model & Strategy

Mission . Costco’s mission is “ to continually provide members with quality goods and services at the lowest possible prices. ” This mission statement is directly linked to its business model and strategy. The firm’s mission emphasizes quality and cost leadership, which are factors consumers usually look for in the retail market. Thus, the mission statement guides actions that contribute to Costco’s competitive advantage. A more detailed analysis of Costco’s mission statement shows strategic focus on customers and their needs as determinants of business development.

Business model . Costco uses a membership-only warehouse club business model. In this model, consumers pay a membership fee to access the low-cost products available at Costco stores. Non-members may accompany members, but only members are allowed to purchase in these stores. However, non-members can use Costco Cash Cards to shop at the company’s stores. Competitors, like Sam’s Club and BJ’s Wholesale Club, also use the same business model.

Strategy . Costco’s generic strategy is cost leadership. This strategy entails maintaining the lowest prices possible. Retail giants like Walmart also use the cost leadership strategy. Costco’s strategy also combines the membership warehouse club business model to differentiate it from other retail firms.

The company’s business model is a core factor that enables Costco to follow its mission. In fact, this business model aligns with the company’s mission. The generic strategy of cost leadership also agrees with and is needed to sustain Costco’s business model.

SWOT Analysis

Main article: Costco Wholesale SWOT Analysis

Costco’s Strengths (Internal Forces)

The company’s success capitalizes on the main strengths of the business, as follows:

The company has very attractive low prices on practically every good or service offered in its stores and on its website.
Costco has rapid inventory turnover combined with high sales volume, contributing to higher revenues. The high sales volume ensures high revenues in spite of low selling prices.
The high sales volume contributes to high operating efficiency. Higher operating efficiency is achieved through minimization of variable costs. Variable costs are lower when volumes are higher.

Costco’s Weaknesses (Internal Forces)

Even though Costco is profitable and one of the largest retailers, the business suffers from the following weaknesses:

Costco’s main weakness is the membership-only warehouse club retail business model. This model encourages customers to buy at Costco stores, but also limits the total number of customers. Non-member consumers might feel unwelcome at Costco stores.
The company has the weakness of the limited array of goods and services. Customers might go to other retailers like Walmart, which has a wider array of goods and services.

Opportunities for Costco (External Forces)

To ensure long-term viability, Costco must consider and exploit these opportunities in the industry:

The company has the opportunity to enter new markets, such as markets in developing Asian countries.
Costco has the opportunity to expand the coverage of its e-commerce websites. The company currently offers online services to a limited group of markets, like the United States, Canada, United Kingdom, Australia, Mexico, Taiwan, South Korea, Japan, and Spain.
The company also has the opportunity to increase the variety of its goods and services to improve the attractiveness of Costco stores to a more diverse population of consumers.

Threats to Costco’s Business (External Forces)

Threats in the retail market impose limits and barriers to Costco’s growth and expansion. These threats are as follows:

The entry of new membership warehouse club retail companies threatens Costco’s potential to succeed in overseas markets. In overseas markets, new membership warehouse clubs are opening.
The aggressive marketing of other retail firms also threatens Costco.

Costco Wholesale Corporation is a highly viable business. The business has the essential strengths to take advantage of opportunities in the retail industry. The firm’s low prices make it attractive even during times of economic difficulties. The company has opportunities to address threats to its long-term viability. The firm could use its website and its network of suppliers to compete with new warehouse club companies. Costco is expected to continue to grow in the years to come. Expansion in overseas markets could also further boost the company’s success.

Costco Wholesale Corporation – Company Profile .
Costco Wholesale Corporation – Form 10-K .
Lim, S. F. W., Rabinovich, E., Park, S., & Hwang, M. (2021). Shopping activity at warehouse club stores and its competitive and network density implications. Production and Operations Management, 30 (1), 28-46.
Park, J., Hong, E., & Park, Y. N. (2023). Toward a new business model of retail industry: The role of brand experience and brand authenticity. Journal of Retailing and Consumer Services, 74 , 103426.
U.S. Department of Commerce – International Trade Administration – Retail Trade Industry .
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Educators, Researchers, and Students: You are permitted to quote or paraphrase parts of this article (not the entire article) for educational or research purposes, as long as the article is properly cited and referenced together with its URL/link.

Costco Business Model Explained: The Things That Led to Its Success

Key Takeaways

Growth and Development

Costco Business Model Explained - How Does It Work?

Costco Business Strategy

Client filtering, a loyal culture.

Suppliers' Independence

Cheap Designs

Membership fees, merchandise sales volume, ecommerce offers, home programs, auto sales program, key partners, financial performance, customer segments, costco travel, concierge service, costco optical, costco insurance, food service, audiobook app.

Costco's Customer Relations

Costco Marketing Mix

Future plans, opportunities.

Sam's Club
Question: What Are Costco's Strategy Elements?

Question: Does Costco Operate a Unique Business Model?

Question: What's Costco's Competitive Strategy?

Bottom Line

Costco is one of the most popular US multinational corporations, praising itself with almost 850 warehouses all over the globe. Out of those locations, over 580 are based in the US. Today, Costco occupies fifth place as one of the largest retailers worldwide.

Its business model is highly successful, and the brand’s recognition goes through the roof. It’s no longer humble as it was in the beginning.

Their focus is on providing customers with affordable yet good-quality products. At the moment, business-wise, Costco plans to maintain its current international position in the retail market. Below, I will detail Costco’s business model, its strengths and opportunities, and more in this Costco Business Model Explained guide.

Key Takeaways

Costco’s business model relies on budget-friendly shopping that helps the company maintain its competitive edge. Its operations function on membership-based warehouses;
The retailer is known for offering more employee benefits and better wages compared to many of its competitors;
Its plans revolve around minding climate change and doing something about it, expanding the business even more, and supporting local suppliers .

Costco’s Brief Business History

Let’s see Costco’s history timeline. The company appeared on the market in 1983. Everyone knows it as Costco, but its legal name is Costco Wholesale Corporation.

The company’s first warehouse was opened in 1983 in Seattle. Costco had two co-founders: Jeffrey Brotman and Jim Sinegal. Brotman was an attorney, but he was part of a retailing-specialized family. Sinegal, on the other hand, worked in wholesale distribution.

Costco’s history goes several years before the first warehouse. In ’76, the first Price Club supermarket appeared. Later, in 1993, the two companies merged, followed by a name change in 1997. So, Costco went from Price/Costco to Costco Companies Inc. The retailer went public in 1985 and then, in 1987, moved its Seattle-based headquarters to Kirkland.

The company’s current name was established in 1999. The merger with Price went quite smoothly due to their similar business models.

After opening more stores across the United States, Costco went international. It expanded its operations in other countries, including Australia, Canada, Mexico, the Far East, and Europe.

From one store in 1983, Costco managed to grow to 22 warehouses by ’86. So, its development was quick and impressive. In ’87, the company created a bakery department and even had a hot dog stand. Costco’s Optical Labs are then launched, but the company’s management decides to shut down its Mid-West division. So, instead, it focused on the West and East costs.

In 1989, Costco already had 46 operational warehouses, being the third most successful US business in terms of profits. By ’92, the retailer launched its 100th warehouse. The first Asian Costco appeared two years later in Seoul, Korea.

The growth is dazzling if you consider that the 200th point of sale opened in ’95. In 1999, Costco created a special order kiosk, and the company’s Travel Business appeared the following year.

Costco Home completed the business’s assets and diversity in 2003.

Both Costco’s expansion and popularity, as well as its business model diversification, continued to boom. By 2005, Costco Travel managed to book more than 57,000 vacation packages. Your typical Costco store generated around $130 million in sales in 2007. The same year, Fortune Magazine called the company a highly admired business.

Over 90 million people were Costco Members in 2017. As of 2022, that number exceeded 118 million. So, the company relies a lot on its customers’ loyalty.

Costco Business Model Explained – How Does It Work?

Costco’s business model is straightforward; they want to meet their customers’ needs by selling quality goods that aren’t expensive. Hence, the clients will save money due to the retailer’s low prices. One thing through which Costco differentiates itself from the competition is its bulk-sized warehouses.

Mission – Costco’s mission statement is to offer its clients low-cost yet good-quality services and products. At the same time, it wants to serve all these clients effectively while remaining one of the largest retailers on the globe;
Value proposition – Costco’s values are offering low prices and good products. Also, it focuses on respecting its suppliers and obeying local laws and regulations. Finally, it’s taking care of both its employees, members, and partners;
Selling channels – the retailer relies on the single-step distribution method to sell its goods. This approach enables Costco to sell its inventory completely and gain revenue before paying its suppliers.

The company markets a wide range of US-branded items and private-label goods. I will group them into the following categories:

Dry foods and groceries;
Cleaning supplies;
Snacks and beverages;
Garden and patio furniture;
Appliances and electronics;
Fresh meat and bakery goods;
Pharmacy products;
Health and beauty items.

Generally speaking, the company’s strategy is cost leadership.

Still, the company’s overall strategy was to become appealing to affluent customers . So, Costco’s main clients are those who are looking not just for discounted prices but also for a customer-friendly shopping environment. Although Costco generates significant revenue, it has a less diverse product range than other retailers.

By comparison, Costco is less of a traditional retailer because it bases its operations on membership fees. Moreover, it focuses on selling products in bulk. As a result, it has an excellent budget reputation, but, honestly, you wouldn’t find the best pricing deals all the time.

Focusing on quality is another part of Costco’s business strategy. This is a valuable part of its growth tactic. Even though the product range could be more diverse, the quality is outstanding. Due to this and other additional factors, the membership’s retention rates are exceptional.

Maintaining a solid reputation is also what Costco focuses on. Rather than spending a lot of money on advertising, Costco does its best to build its ethics, collaboration, and customer service. For instance, the wages are higher here than at Walmart.

At Costco, investing in technology and developing an agile supply chain is also essential. Through new technologies, the retailer improved customer satisfaction and convenience. They have digitalized many of their services through cloud technologies.

Costco’s distribution management has made the business significantly more successful. Its lean supply chain keeps operational costs low. Each warehouse holds around 3700 items. Moreover, the company, just like Walmart, eliminated the middleman.

Costco’s Business Pillars

I will further detail each of Costco’s business pillars.

The company relies on its subscription model, discouraging low-income clients from paying the fee and becoming members. That’s why the retailer has a higher spend per shopping trip.

One of the most supportive customer and employee bases in the world is at Costco. Their clients are happy and loyal, while their staff is satisfied with the benefits it receives. Hence, they dare to take the initiative when needed. As a result, Costco’s devoted culture has boosted employee productivity and one of the highest client retention rates in the industry.

Suppliers’ Independence

The retailer thrives even without a large product variety due to its more exclusive customer base. That derives from the business’ membership model. Therefore, Costco can afford to be picky when choosing its suppliers, which further increases the company’s negotiating power. All this process makes me think of a domino effect.

Operating costs are maintained low due to the warehouses’ simple and industrial design. They prefer to invest their profits in other things, such as reputation, image, and client retention, rather than spending it all on store design.

Operations – How Costco Gains Its Money

Since its launch, the retailer has expanded its investment channels, leading to a more diverse income stream. The primary revenue rate comes from selling discounted in-bulk products. But there are also other sources of income.

Unlike conventional warehouses, Costco requires clients first to become members. Only then can you achieve good bargaining leverage. In addition, Costco has a tier system , so you may see a variation in its membership fees. These fees account for over 2% of Costco’s annual income.

Over 90% of the retailer’s revenue comes from sales of SKUs (store-keeping units). With just 3700 items in any of its warehouses at all times, the company can exceed $150 billion in yearly income.

In 2001, the company launched its online shop and has gained much popularity since then. Costco’s members and clients can benefit from the retailer’s low prices without visiting its physical warehouses. Hence, increased convenience!

Costco offers many home installation services, from flooring and carpeting to countertops and HVAC. This part of the business represents a valuable income stream for the retailer.

Nowadays, Costco collaborates with over 3000 auto dealerships. Through this program, customers can purchase either new or second-hand vehicles. Besides the low prices, clients can also benefit from extra value-added perks that Costco offers.

Costco’s partners are all important. I’m talking about its suppliers, branding companies, technology businesses, non-profit programs, credit partnerships, and payment solution providers.

The most notable eCommerce delivery partners are Instacart and Google Shopping . Other valuable partners are gas stations, travel companies, optical clinics, pharmacies, and hearing aid centers.

As for its credit services, Costco signed a deal with Visa and Citibank . This bank issues all Costco cards. Moreover, every time a client uses a Visa card to pay for a Costo purchase, the retailer earns a royalty.

In 2022, the retailer saw significant profit margins, with a revenue of over $4 billion. A Costco client spends around $136 on one shopping trip. That’s higher than Walmart’s Sam’s Club. The retailer’s market capitalization was more than $203 billion in 2022. The company’s return on equity hit the mark of 28%.

By 2023, Costco’s net sales for 26 weeks were over $116 billion. That represented a considerable increase from the previous year’s $108 billion. In percentage, there was a boost of 7.1%.

Costco’s Services

I am impressed with Costco’s various services. Here are a few details about each of them.

The retailer’s members based in either the US or Canada can benefit from Costco’s vacation packages. You could travel to Hawaii, Europe, Mexico, Las Vegas, South Pacific, and other amazing places as a member.

Costco’s concierge service is free for those customers who buy electronics. The staff offers valuable insights regarding the use, installation, and setup processes. This further decreases the rate of product returns.

The company’s optical service is one of the largest in the US. So you can benefit from a consultation whether or not you’re a Costco member. Still, only members can receive a prescription.

Costco has signed an agreement with Connect. Together, they provide customers with home, auto, and even umbrella insurance .

At Costco, you’ll find fresh, dry, packaged, frozen foods, and more. You’ll even see hot dog carts at the company’s warehouses. With Costco, the sky’s the limit regarding its available foods: beverages, yogurt, ice cream, pizza, sandwiches, and so many other items.

Costco began selling audiobooks in 2021. You can also buy a mobile app to listen to these audiobooks. The app is available for download on both iOS and Android devices. However, only Costco members can gain access to those materials. For them, the app is free.

Costco’s Customer Relations

Costco’s client engagement is high, and that’s because of all its effective customer support systems. You can contact the company through several channels:

DM or comments on social media;
Through its self-service platform, but that’s available only in specific areas;
In-person sale support;
Via Costco’s membership warehouse club.

Marketing Strategy

Instead of relieving on traditional advertising, Costco focuses on its membership club. This system is less risky and more profitable. Also, clients get more benefits from it since they love low prices. Those unhappy with their purchases can even receive a full refund.

Secondly, Costco perfects its inventory management, high-volume sales, and private-label branding. These are the company’s essential pieces that led to its success.

Let’s dig deeper into Costco’s marketing mix.

Large amounts of popular and low-cost products;
High value delivered to customers;
A wide range of available goods – appliances, groceries, electronics, toys, beauty items, furniture, fitness gear, optical services, etc.;
Frequently changing inventory;
Seasonal products;
Costco’s private label – Kirkland Signature .
Physical stores – warehouses;
The company’s mobile app;
Costco’s online shopping platform;
Doorstep delivery service;
Personal selling;
Sales promotion;
Public relations – press releases, Costco’s monthly publication, etc.;
Direct marketing – email and newsletters;
Zero advertising;
Branding image and reputation through donations.
Low margins;
High value;
Low price tags;
Annual member fees;
Coupons and discounts;
Special promotions and offers;
High-low pricing strategy – helping clients save money;
Market-focused approach.
Building a larger membership base;
Continuing to sell in bulk while keeping prices low. Boosting shopping frequency;
Opening over 20 new stores all over the globe;
Planning to spend around $4 billion on its new warehouses.

SWOT Analysis

It’s time to see some of Costco’s strengths and weaknesses and the market factors that could impact the company.

Competitive edge through its membership model;
No money spent on advertising;
Appealing low price tags;
A wide range of goods;
Quick inventory turnover;
High sales – leading to low operational costs.
The largest market segment in North America – so there’s a dependence on that segment;
Non-members feel unwelcome and are reluctant to buy at Costco;
Limited product selection – some competitors, including Walmart, offer a larger mix of goods.
Entering new markets, including developing Asian countries;
Attracting younger clients;
Expanding its online store’s coverage;
Increasing its product variety.
Labor and transport costs;
New and strong competitors like retail businesses that focus on the same approach – membership-only warehouses;
Economic slowdown;
Other retailers’ aggressive marketing;
Stronger eCommerce competitors.

Main Competitors

Among Costco’s main competitors are Sam’s Club, Amazon, Walmart, and Target.

Walmart is a better choice for non-grocery purchases;
Just like Costco, it has competitive prices;
Walmart provides a broader product selection;
Costco offers greater employee perks;
Self-checkout is better at Walmart.
It was created in 1902;
Most of its market is within the US;
Costco is better if you want to buy allergy meds, alcoholic beverages, sodas, and furniture;
Target is better if you purchase packaged foods such as hot cocoa powder, books, beauty products, and OTC meds.

Sam’s Club

Both companies have similar business approaches;
Sam’s Club is, however, a Walmart subsidiary, while Costco is publicly traded;
Costco has higher membership fees but lower price tags;
Sam’s Club owns more physical locations within the US, while Costco is larger globally.
In terms of value, Walmart wins;
Amazon’s client satisfaction is not as good as Costco’s;
Amazon is a better choice if you want to buy individual products, not bulk;
Costco wins by having a generous money-back return policy.

Question: What Are Costco’s Strategy Elements?

Answer : Several vital elements create Costco’s business model: low prices, good value items, diverse yet limited warehouse item selection, a mix of private-label products, and nationally-branded goods. Low operating costs, a great shopping environment, and active warehouse expansion also play an essential role.

Answer: Costco’s strategy is unique, relying on membership fees. It focuses on client retention, hence the high loyalty rate. The company sells all its merchandise at wholesale prices.

Question: What’s Costco’s Competitive Strategy?

Answer: They differentiate themselves from the competition by using memberships. These drive higher customer loyalty. Clients know they can rely on Costco’s products as well as on their low prices. Costco’s strongest competitor is Walmart.

Costco’s business model has proven itself unique, leading to its global success. As a warehouse retailer, Costco is profitable and highly viable. Its business approach leads to many advantages that give strong competitive leverage.

Still, to maintain its long-term viability and success, Costco should address every market threat it faces. The company’s profitability might increase through oversea expansion. But, they must include that objective in their business strategy.

Let’s look closely at what Costco does in terms of business strategies. We can see its transparency, great partnership and networks, and speedy customer service. All these are essential values for the retailer. It’s a win-win situation for all since they benefit everyone, from customers to employees and Costco’s stakeholders.

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Costco Insurance Agency, Inc. is a licensed insurance agent. Insurance plans are offered by licensed insurance companies or health maintenance organizations. Health insurance plans on the CBC Health Insurance Marketplace for Costco Members are brokered and /or serviced by CBC Benefit & Insurance Services; CA License #: 0D75486 and Costco Insurance Agency License #: 0D08407.

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All insurance products are issued by licensed insurance companies and made available to applicants through Costco Insurance Agency, Inc., which receives a commission from insurers to distribute these products. Your insurance policy, not the information on this site, determines the applicable terms and conditions of the insurance product. Neither Costco Insurance Agency, Inc. nor its affiliates guarantee the services of any insurance company. The plan rates and benefits displayed on this site are for illustrative purposes only. Plan benefits and rates are based on final enrollment and insurance carrier confirmation.

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Costco's Financials
Costco's Business Segments
Costco's Recent Developments
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How Costco Makes Money

The United States is Costco's biggest market

Costco Wholesale Corp. ( COST ) is a big-box retailer and a wholesale warehouse club operating roughly 847 locations in North America, Asia, and Europe. It also has a major e-commerce operation. The company's warehouses offer low prices on a limited selection of both name-brand and private-label products, typically offered in bulk volumes.

Customers purchase memberships to access the warehouses and make purchases. Costco aims to offer lower prices than competitors by purchasing merchandise directly from manufacturers, limiting store hours of operation, and minimizing labor by storing merchandise on large racks above a vast, self-service warehouse sales floor.

Costco's core merchandise offerings include foods and sundries, such as dry groceries, candy, freezer, deli, liquor, and more; non-foods, including major appliances, electronics, health and beauty aids, hardware, automotive care, housewares, jewelry, and more; and fresh foods, such as meat, produce, service deli, and bakery. Costco also offers warehouse ancillary products and services, including gasoline, pharmacy, tire installation, and more.

The discount retailer also generates revenue through its e-commerce business and through membership fees. Costco's main competitors include discount stores such as Target Corp. ( TGT ) and Walmart Inc. ( WMT ), as well as big-box rivals like BJ's Wholesale Club Holdings Inc. ( BJ ). The company also competes with e-commerce retailers like Amazon.com Inc. ( AMZN ).

Key Takeaways

Costco is a wholesale retailer selling discounted goods through membership warehouses and online.
Costco has three reporting segments: U.S. Operations, Canadian Operations, and International Operations.
Its U.S. operation is the biggest contributor to both revenues and operating income.
Foods and sundries account for the largest share of revenue among all of Costco's merchandise categories.
Costco increased its dividend per share in 2023 as well as announced plans to crack down on membership sharing.

Costco's Financials

Costco announced in May 2023 financial results for Q3 of its 2023 fiscal year ( FY ), the three-month period ending May 7, 2023. Net income attributable to the company's shareholders dropped 3.8% compared to the year-ago quarter to $1.3 billion. Revenue grew 2% year over year ( YOY ) to $53.6 billion. Operating income, which the company uses as a profitability metric for its individual business segments, decreased 6.3% YOY to $1.68 billion.

Costco's Food and Sundries merchandising category saw the biggest growth in sales followed by its Fresh Foods category. Its Non-Foods and Warehouse Ancillary and Other Businesses categories saw drops in sales. Revenues were up for two reporting segments: U.S. and International, while Canada's revenues remained static. Operating income for the U.S., the largest contributor to both revenues and income, took a hit, with a decrease of 14.8%.

Costco's Business Segments

Costco divides its business into three reportable segments: United States Operations, Canadian Operations, and Other International Operations. The company provides a breakdown of both revenue and operating income for these three segments.

United States Operations

The bulk of Costco's business comes from its operations in the United States, making this the largest of the company's three reportable segments. For Q3 FY 2023, United States Operations reported roughly $39 billion in total revenue, a 1.3% YOY increase. In the same time period, the segment reported $1.0 billion in operating income, a 14.7% YOY decrease. In Q3 FY 2023, United States Operations represented 72.8% of Costco's total revenue and 61.2% of total operating income.

Canadian Operations

Though significantly smaller than its U.S. operations, Costco still does considerable business through its Canadian Operations segment. Canadian Costco customers can not only shop for discounted groceries but can get discounted pet insurance as well. This segment reported about $7.3 billion in total revenue, which remained flat from the same quarter the previous year. Canadian Operations also posted operating income for the quarter of $327 million, a 0.93% YOY increase. For this quarter, Canadian Operations represented 13.5% of Costco's total revenue and 19.5% of the company's operating income.

Other International Operations

Besides the U.S. and Canada, Costco operates membership warehouses in Mexico, the U.K., Japan, Korea, Spain, Australia, France, China, New Zealand, Sweden, and Iceland. It also operates in Taiwan through a majority-owned subsidiary. This group of countries is represented in the Other International Operations segment. For Q3 FY 2023, Other International Operations generated total revenue of about $7.3 billion, a 7.9% YOY increase. Other International Operations also posted Q3 FY 2023 operating income of $325 million, a 24% YOY increase. The segment comprises 13.7% of revenue and 19.4% of operating income.

Costco's Recent Developments

In April 2023, Costco announced an increase in its quarterly cash dividend from 90 cents per share to $1.02 per share, on a quarterly basis.

In June 2023, Costco notified various media outlets that it would be cracking down on membership sharing as it had noticed an uptick in such behavior since it expanded its self-service checkout. It believes membership card sharing hurts the business and the company's ability to keep prices low.

Costco Wholesale Corp. " 2022 Annual Report ," Page 4 of PDF.

Costco Wholesale Corp. " 2022 Annual Report ," Page 3-4.

Costco Wholesale Corp. " 2022 Annual Report ," Page 5-7

Costco Wholesale Corp. " Form 10-Q for the Period Ending May 7, 2023 ," Page 3

Costco Wholesale Corp. " Form 10-Q for the Period Ending May 7, 2023 ," Page 17

Costco Wholesale Corp. " Costco Wholesale Corporation Announces an Increase in Its Quarterly Cash Dividend ."

Gizmodo. " Costco Puts a Stop to Sharing Membership Cards ."

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Big Changes Are Coming To Costco In 2024

Nearly 128 million people held memberships to Costco Wholesale in 2023, according to Statista . Needless to say, the corporation — which opened in the 1980s in Washington state – is a total powerhouse in the retail sector. With such a massive chunk of consumers worldwide entering into its locations on a daily basis to buy chicken , toiletries, bulk packaged snacks, gasoline, diapers, and more, any and all proposed changes to the Costco company stand to affect a whole lot of people.

And if you're one of the millions who frequent the warehouses, you might want to stand by — from the looks of it, 2024 will be an exciting year for the Costco organization. It seems that not even our favorite wholesaler is immune to New Year's resolutions, and there are multiple changes reportedly in the works. From new products to food court re-styling to card scanning policies to potentially higher prices attached to memberships, prepare yourself for some of the biggest changes coming to Costco in 2024.

Its bakery is getting some new additions

Let's start things off with a positive, shall we? We doubt there's a soul alive who wouldn't classify the news of a brand new Costco bakery item as thrilling if they're familiar with the celebrated department's long array of decadent products. Lucky for us, there's not just one baked newcomer to add to our Costco shopping list of must-tries — there are three.

The first is a Roasted Garlic Parmesan Bread loaf, a sinfully soft on the inside, perfectly crisp on the outside loaf of savory bread with — wait for it — real chunks of garlic scattered throughout. Laura Lamb, who runs Costcohotfinds on Instagram, declared it one of the best loaves she's tasted in her life ... something which pretty significantly piques our interest in the treat. The second item in the new Costco baked goods lineup is the Triple Chocolate Cream Pie, which employs graham cracker crust, layers of brownie, whipped cream, and shaved chocolate curls to create a rich, unforgettable flavor. The final newest baked beauty worthy of mention is the Cookies & Cream Mini Cake, a cupcake-like chocolate dessert smothered in a thick layer of frosting reminiscent of Oreo cookies . We should warn you that these ones come in packs of six — so be prepared to institute some self-control if you don't want to eat them all in one sitting.

Cards will be scanned at the door

Everyone who shops at Costco is familiar with the process of pulling their wallet out of their back pocket before hitting the front door and flashing the photo of their smiling face on their membership card to the attendant working the entrance. Since shopping at Costco is a membership-only privilege, showing proof of being a paying club affiliate is paramount. In the past, a simple flash of the Costco-issued ID card has been sufficient — but in 2024, the warehouse will be taking things a step further before granting entrance to shoppers.

Since there have been recent issues with members sharing their cards with non-paying friends or family members to get them in the door, Costco is reportedly cracking down by employing scanning technology before you even enter inside. "Membership scan at entrance," reads the title of a recent Reddit thread beside a photo displaying an entrance worker with a hand scanner. "I've seen people with multiple carts full of food get turned away (not without a fight) at the checkout line due to having someone else's card," described a user on the thread . "This could be an effort to avoid situations like that?" While it's unclear if this new policy has carried through to every location, we recommend being prepared for this reality the next time you head to your nearest warehouse.

You can expect more store openings

If you thought the world had enough Costco locations already, you thought wrong. Apparently, the need for more warehouses exists ... as evidenced by the company's reported plan to expand by 31 new locations in 2024. Those currently under construction are listed on Costco's official website and include cities such as Loomis, California, Daytona Beach, Florida, and Shenzhen, China, among others. The hope, of course, is that these new additions to the Costco universe will cut down on overcrowding in the existing ones ... so naturally, many consumers have questions about how long the construction of these much-needed warehouses will take.

"130 days," answered an alleged construction worker on Reddit , satisfying customer curiosity. "That's the contract schedule [...] 75 days of which are the building, siding, roof and all doors. I'm a project manager for the company that builds all new Costcos (the actual steel building part) in the US, Canada, and some abroad. But overall, it's a 130-day schedule." This could actually be considered a surprisingly speedy timeline, considering the sheer size of the warehouses themselves. Hence, we doubt the corporation will have any issues meeting its New Year's goal of 31 new structures. At the end of the day, though, we suppose we will have to just wait and see.

The wholesaler has some brand new leadership in the house

Craig Jelinek had been running the show as Chief Executive Officer, or CEO, of Costco for about 11 years before he announced in October of 2023 that he would be stepping down. His chosen successor, Ron Vachris, had a story that many people connected with instantly — not only had he been working within the Costco organization for 40 years, but he had also started his long-standing career as a forklift driver. This rags-to-riches tale involving one man climbing the corporate ladder step by step gave many a warm feeling regarding the up-and-coming boss, his humble beginnings no doubt making him seem more relatable.

The official change in CEO took effect January 1st, 2024. While Jelinek, the previous Chief Executive Officer, will be staying on through April to serve as an advisor and assist Vachris in the transition, many are waiting with bated breath to see what changes might be instituted for Costco under its new leadership.

You'll have to say goodbye to churros

Let's be honest — churros are straight-up delicious. These deep-fried, doughy, cinnamon-and-sugar-coated sticks are truly a culinary gift to humankind, and Costco frequenters are likely familiar with the company's take on the baked treat with Spanish roots. For years, the Costco food court has dished out its popular churro product for hungry consumers — but in 2024, the snack's reign has come to an unexpected and heart-wrenching end.

The food court churros have reportedly been dashed from the menu, leaving many consumers devastated. It's never easy for your heart or your taste buds to say goodbye to a treat you're enthralled with ... but at least there is a brand new available item on the food court menu to help distract you from your sadness. At the same time that the last of the churro dough was being chucked from Costco food court locations, a red carpet was being rolled out on a new treat: the Double Chocolate Chunk Cookie. Whether or not the timing of the cookie's entrance was planned so that the organization's angry, churro-mourning fan base might intentionally be soothed, we cannot say. "These better be amazing," said a user on Instagram in reference to the switch, "because to take the churros out is wildddd." Whether or not the change will be ultimately welcomed or resented remains to be seen.

You may have to stand to eat

The white-and-red tables at the Costco food court are so well-known that they're likely one of the first things you visualize when picturing the warehouse interior. It's well understood that when you order your bubbling cheese pizza, you will be able to sit down to eat it ... at least, this was the case in 2023. In 2024, it appears, this reality could shift. According to customers, some Costco locations have made the switch to standing tables only in their food courts — and more could be on their way to complying with the unpopular trend.

"My Costco food court replaced the tables with these monstrosities," reads the title of a recent Reddit post. The dissatisfied consumer's photo featuring tall, circular white tables with no attached benches racked up plenty of shock and dismay among responding users, who expressed pity for the poster's description of balancing her small child on her knee so they could eat. Though this post was from a Costco located in South Korea, the United States is seeing an increasing number of identical standing tables pop up, as well. "Mine, in Montana, added a few to the already existing tables," confirmed a responding user on the thread. "But they didn't take the seated ones away." If this trend continues to spread, we hope that some regular seating options will continue to be available for those who are physically unable to stand and eat, at the very least.

We might see a super-Costco open this year

We've all seen some of our favorite stores and markets go "super." Target, for example, has opened up some Super Target facilities (larger-than-standard sized locations that offer a full grocery selection), and Walmart has ample 24-hour Supercenter locations under its belt. When it comes to Costco Wholesale, however, it's not likely a place you thought of as needing a super-sized alternate version of itself — likely because its locations are so big, to begin with. However, word on the street is that a super-sized Costco location may very well be in the works.

According to Business Insider , Costco has plans to erect a warehouse over 240,000 square feet in size in Fresno, California. This would become the company's largest location by a landslide, overshadowing its current largest space in Salt Lake City, Utah, which sits at 235,000 square feet. While only a portion of this massive location would actually be open to standard shoppers (a chunk of the building supposedly being dedicated to commercial customers only), we're sure we speak for the majority of people when we say that we'd love the experience of strolling through a super-sized Costco at least once in our lives.

Your membership price may go up

Costco has traditionally raised its rates for annual membership fees every five or so years. Its most recent increase occurred back in 2017 — therefore if this pattern holds, the world is overdue for another upward slide in price in 2024. While the official word of an upped membership rate hasn't yet come down from the higher-ups at Costco Wholesale, we can all likely expect it to at some point in the near future. According to Today , Richard Galanti, the chief financial officer for the Costco corporation, stated in September 2023 that a rise in membership prices was a "matter of when, not if."

Galanti reported that with consistent renewal rates and new membership sign-ons having remained strong in recent years, the corporation hasn't felt any rush to change anything for some time. This has undoubtedly been a blessing for many, who have found a haven in Costco's low prices during the ebbing onslaught of inflation. However, Galanti seems to be aware that the company can't keep it up forever and will ultimately need to do what it has to do to remain profitable. Galanti concluded his September update with the mysterious warning: "You'll see it happen at some point." Yikes. We suppose all we can do is wait, keep shopping, and see what happens.

You can anticipate some app improvements

With the extent to which our modern society uses technology, having a successful app associated with your business can be a large part of your success. It can make or break the customer experience, in fact, sometimes determining whether or not consumers want to return to the doors of the place in question at all.

Despite all of its bulk-goods glory, Costco has been surprisingly lacking in the app department for years. The company's CFO (chief financial officer), Richard Galanti, reported that customers originally bestowed Costco's app store an abysmal 2.3-star rating — causing the organization to focus its energies on improving things. In-store search engines, digital membership cards, and the ability to create an in-app shopping list, to name a few, are some of the features that have been added to the Costco app, bringing the customer rating for the technology up to a positive 4.7 stars.

While this is a huge improvement, relished Galanti, Costco has no plans to stop there. The company reports that it will be working on further developments in its technological sector — and we wait with bated breath to see what new, exciting features pop up this year when we load the Costco app.

Its newest hires will be getting a raise, according to employees

Raises can be a touchy subject among employees in any sector, to be sure. Who gets one, who doesn't, and when ... these are all questions that, generally speaking, leave one person very happy and yet another disgruntled. And at Costco, there are some current feelings — positive for some, negative for others — spreading throughout the community of its throngs of employees.

"So it's official," reads the title of a recent Reddit thread under r/Costco, "all new hires will get a dollar increase in pay an hour. Anyone higher than the first two steps get NOTHING." This seemingly odd call for a paycheck rise from corporate for only the brand-new Costco employee base has brought out numerous opinions from its workers, some of whom are excited and others who are downcast. Some employees suggest that the policy is likely an attempt at motivating new hires to stick around longer, pointing out that seasoned Costco employees also make much more than someone just starting out at the warehouse. Other seasoned workers, however, maintain that rewarding those who have not proven their ability as opposed to the ones who have is blatantly unfair. Either way, it appears the change is happening — for those who like it or not.

It now carries Bibigo's Kimchi and Cheese Rice Balls, which are trending on Tik Tok

These days, TikTok feels like a legitimate news station for all things Costco. Hot finds, new products; whatever it is, you better believe someone will be taping the evidence and sharing their experience with the world via the video-based social media platform. TikTok is currently lighting up with dozens of videos regarding a hot new product to the Costco shelves, which is quickly becoming a viral grocery treasure.

Though it's unclear exactly when Bibigo's Kimchi and Cheese Rice Balls started showing up in Costco's freezer section, they appear to have made a low-key entrance in some select international warehouses in late 2023. By January 2024, they have circulated to various locations across the U.S. and have quickly blown up in popularity. Trending on platforms like TikTok, YouTube, and Reddit, these microwaveable rice-based balls filled with bubbling mozzarella cheese have become one of the top new products to try. You're welcome to hop on the bandwagon along with all the other viral taste testers yourself ... assuming your local Costco carries the kimchi creations. If not, though, never fear; given its sudden and immense popularity, we would expect the product to continue to circulate throughout more and more stores in the coming days.

You'll be able to find bulk packs of Magic Spoon Cereal

Everyone wants to be able to kiss their standard sugary, empty-calorie breakfast cereal goodbye and pour a healthier option into a milk-filled bowl, but traditionally, there haven't been too many options out there. Cue Magic Spoon Cereal — a celebrated sugar-free, keto-friendly cereal packed with 14 grams of protein per bowl. Though there has been plenty of love thrown in the direction of this newcomer to the breakfast aisle, like most health foods, it has been available only in smaller boxes from retailers and is impossible to find in a larger-sized option.

Cue Costco, swooping in to do what they do best. With the coming of the new year, Magic Spoon Cereal is now available in an extra-large 14-ounce box at the warehouse — making it so your healthy fruity rings can last longer than the first day you buy them. At some stores, the cereal appears to be packaged as two 7 oz. boxes in one container, but either way, you are getting double what you would at your local Target for close to the same price. Costco, you've done it again, and we wish you luck smashing the rest of your New Year's resolutions, too.

Buying a Cell Phone at Costco Wholesale: 4 Things To Know

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Costco used to be one of the best places to buy a new cell phone or phone plan. However, the kiosks that used to offer the best deals shut down last year after the vendor went out of business. Recently, Costco’s phone kiosks have reopened, but the deals aren’t exactly the same.

Money expert Clark Howard recently talked about buying a cell phone at Costco on his podcast. In this article, I’ll share Clark’s latest advice on buying a cell phone at Costco.

What You Need To Know Before Buying a Cell Phone at Costco

Costco offers excellent deals on many essentials, but unfortunately, cell phones aren’t currently one of them.

In the past, Costco has had cell phone kiosks set up in the warehouse with excellent deals for new devices and new lines of service on any of the three major cell phone service providers. Now, those same kiosks offer service from one of the three service providers (either AT&T, T-Mobile or Verizon) and you won’t find the same great deals on cell phones and plans that you’ve seen in the past at Costco.

That being said, you’ll still find a selection of unlocked iPhones available on Costco’s website that are cheaper than buying your phone directly from Apple. Plus, all of the iPhones at Costco come with AppleCare+.

Before you buy a new phone or phone line through Costco, here’s everything you need to know.

Unlocked Phones at Costco
Buying a Cell Phone Plan at Costco
Return Policy and Warranty Information
Clark’s Take: Should You Buy a Cell Phone at Costco?

1. Unlocked Phones at Costco

If you’re looking to purchase a new phone, you won’t find the most extensive selection at Costco. Instead, Costco offers a small selection of devices from the latest iPhone series.

If you visit the cell phone service kiosk in person at your local Costco, you may be able to buy a new phone through one of the three major cell phone service providers. However, Costco also offers a selection of unlocked iPhones sold online and in-store that you can activate with any carrier after you’ve purchased the phone .

“Costco.com often sells iPhones cheaper than you can buy somewhere else,” says Clark. “They do these regular promotions where they offer deals on iPhones significantly better than you can buy direct from Apple, and often better than what you can buy from one of the big cell phone carriers themselves.”

At the time of writing (October 2023), there were three different unlocked iPhones available online at Costco:

iPhone 15 with AppleCare+ (128GB) for $949.99
iPhone 15 Pro with AppleCare+ (128GB) for $1,169.99
iPhone 15 Pro with AppleCare+ (512GB) for $1,469.99

Buying the same 128GB unlocked iPhone 15 with AppleCare+ directly from Apple costs $978 at the time of writing. The 128GB iPhone 15 Pro with AppleCare+ costs $1,198 at Apple.com , and the 512GB iPhone 15 Pro with AppleCare+ costs $1,498. That means you’ll find a better deal at Costco on any of these iPhone models than you will see directly from Apple.

You can check out the current selection of unlocked iPhones online at Costco. You can also check your local warehouse for in-stock unlocked iPhones. If you order a device online, you can choose to have it shipped directly to your house or to your nearest Costco Wholesale for free in-store pickup.

2. Buying a Cell Phone Plan at Costco

In the past, Costco’s cell phone kiosks have been a great place to buy a new phone and phone plan. However, those kiosks suddenly shut down toward the end of last year. Now, Costco’s cell phone kiosks are reopening in warehouses, but you won’t find the same deals or plan selections that you’ve seen in the past. Instead, your local Costco will likely be offering postpaid plans from either AT&T , T-Mobile or Verizon .

“Costco had a sweetheart deal for years,” says Clark. “They had an outside vendor that set up the cell phone deal there and Costco members normally got vastly superior deals buying phones and signing up for service inside the Costco versus going to an AT&T, T-Mobile or Verizon store or wherever.” “Unfortunately, the deal that Costco had negotiated was too good, and the vendor went bust. So those booths disappeared. And what’s in their place at least for now… Costco is temporarily renting space to the big cell phone carriers, and the deals stink! ”

After hearing that the Costco kiosks have reopened, I visited a nearby Costco myself to see what was available. I found that this store had partnered with Verizon and offered the same postpaid plans I’d seen online.

There was an incentive for customers opening a new cell phone line: a $250 Costco Shop Card. The representative in the store couldn’t confirm that the same deal would be available at every Costco.

I also visited Costco’s website and found exclusive Costco Member discounts for AT&T and T-Mobile:

AT&T: Get up to $350 off an eligible smartphone, save $10/month per line on AT&T Unlimited Premium and Costco will credit your activation fee
T-Mobile: Get up to $400 when you activate with a Go5G Plus plan ($150 member benefit plus $250 credit)

While these deals may be worth comparing to in-store or online-exclusive deals from a major cell phone provider, it’s no longer safe to assume that Costco is offering the best deals on cell phone plans.

3. Return Policy and Warranty Information

While you likely won’t find the best deals at the Costco cell phone kiosk, you’ll still find a cheaper price tag on unlocked iPhones. If you do buy an unlocked phone from Costco, it will come with AppleCare+ and can be returned to Costco within 90 days of purchase.

According to Costco’s website, AppleCare+ includes the following coverage:

24/7 priority access to technical support
Express Replacement Service (provides a replacement before you return your device)
Hardware service is provided by Apple-certified technicians using genuine Apple parts
Accidental damage is covered for unlimited incidents — each subject to a service fee of $29 for screen or back glass damage, or $99 for other accidental damage, plus applicable tax
Battery service

You can learn more about AppleCare+ on Apple’s website . Additionally, you can check out the details of Costco’s return policy online .

4. Clark’s Take: Should You Buy a Cell Phone at Costco?

Costco used to be a great place to buy a phone or start a new line of service with any of the major three providers. Unfortunately, that’s no longer the case. Now, you’ll likely be able to beat the selection, prices and incentives at Costco if you’re looking to get the best deal on a cell phone or cell phone plan.

Instead of buying your next phone or activating a line of service at Costco, here’s Clark’s latest advice:

“So buying a cell phone now, how do you do it? Generally, the thing I’m finding best for people who don’t want to be in a payment contract with any cell phone carrier is you go direct to the selling site of the manufacturer (or often Amazon) to buy a new or reconditioned cell phone,” says Clark. “Often, if you go to the manufacturer, they’re offering deals for you to buy a phone with an offer of crazy generous trade-ins. So generous that I’ll go and buy a used phone on eBay that’s in good condition and trade it in and often I’ll save $500-$800 on the phone by doing that.”

If you don’t already have an old phone in good condition that may be eligible for a trade-in, you can buy one online at places like eBay or Swappa for a great price . For more options, be sure to check out our top picks for the best places to buy unlocked phones . For more details on how to save at AT&T, T-Mobile or Verizon with a trade-in, here are the latest deals for getting a free phone when switching service providers .

To save even more on your monthly phone bill, you may consider a prepaid phone plan instead . You’ll find affordable prepaid phone plans available directly from AT&T, T-Mobile and Verizon. You’ll find the cheapest phone plans available from resellers like Visible, Mint Mobile, Tello Mobile, and others. For more options, check out our full list of the best and most affordable cell phone plans in 2023 .

Have you bought a cell phone from Costco recently? Tell us about your experience in our Clark.com Community or check out the latest conversations around cell phones.

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Costco’s former CFO on ‘when, not if’ the $60 membership fee will go up: ‘It’s not some big analytical formula’

Costco members can rest easy—for now. The wholesaler earlier this month did not increase its $60 annual membership fee during its earnings call, but that doesn’t mean it won’t in the future. Indeed, former CFO Richard Galenti told analysts that it’s a matter of “when, not if.”

But, he clarified, Costco won’t just raise the price if sales start falling off: “I don’t think it would be done simply because, hey, things have slowed down a little bit.” He said the company would also look at other factors such as membership renewal rates and new sign-ups.

At the same time, he added, “it’s not some big analytical formula,” but rather something Costco simply plans to do “at some point.”

That explanation might leave some wondering how exactly the company prices its membership program and what exactly would inform any future increase. However, some experts say that’s a difficult question to answer, in part because membership and loyalty programs are often supplementary revenue streams.

“Most of it’s going to be pure profit,” Wayne Taylor, marketing professor at Southern Methodist University who has researched loyalty programs, told Retail Brew. “If you look at Costco, you have to realize they’re using these membership fees to pay for the rest of their goods.”

More fees, more profits

As Taylor pointed out, membership fees generated $4.5 billion in revenue in 2023, which is 72% of its total income of $6.3 billion.

While membership fees contribute a smaller portion of net income at Walmart Inc., which includes both its members-only wholesaler Sam’s Club and its namesake big-box chain, they are expected to make up a bigger chunk of profits going forward. The company said it expects fees from its Walmart+ membership program and advertising to represent 20% of annual operating income in fiscal year 2025.

So why raise the price of membership as Costco is hinting?

Taylor said it could be a matter of sticking a “Band-Aid” on a business that is struggling in other areas (as Costco’s Galanti explicitly denied the company would do) or retailers might just be trying to see “what they can get away with” before the price point starts scaring away customers. On the latter point, he said retailers have a certain amount of slack before that starts to happen.

“What are you going to do, cancel your Costco membership because it’s another $5 a year?” he said. “I think they get that they have a bit of leverage here.”

For those non-warehouse companies that launched membership programs more recently, competition also appears to be a guide for pricing decisions.

Target , for example, just launched its membership program at a promotional price point of $49 for the first year for Target Circle Card holders and $99 annually for everyone else. That’s exactly one dollar more per year than Walmart+ but still $40 less than an annual Amazon Prime membership.

“Competition is definitely an issue,” Yuping Liu-Thompkins, marketing professor at Old Dominion University, told Retail Brew. “Right now, [Target’s membership program] is still under Amazon’s membership, but they’re not offering as much benefit either. So in a way it’s a combination of what the competition is charging for these kinds of things, as well as what is the comparable benefit that you’re offering versus others.”

This article was initially published in Retail Brew .

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Costco launches weight loss program for members

C ostco is jumping into the weight loss game by giving members access to sought-after medications such as those made by pharmaceutical giants Eli Lilly and Novo Nordisk .

Effective immediately, Costco members can sign up for a weight loss program through its partner Sesame, a health care marketplace aimed at helping those with high-deductible plans or no health insurance afford medical care.

Members at Costco locations nationwide will get three months of clinical consultation as well as other services for $179.

ELI LILLY, NOVO NORDISK TEST POPULAR WEIGHT LOSS-RELATED DRUGS ON CHILDREN

Clinicians will be able to write prescriptions for medications, including Novo Nordisk's Ozempic and Wegovy, as well as Eli Lilly's Mounjaro and Zepbound, all of which have surged in popularity after their weight loss benefits were touted online by high-profile figures.

"We are witnessing important innovations in medically-supervised weight loss ," Sesame CEO David Goldhill said. "Sesame’s unique model allows us not only to make high-quality specialty care like weight loss much more accessible and affordable, but also to empower clinicians to create care plans that are specific to — and appropriate for — each individual patient."

READ ON THE FOX BUSINESS APP

Costco and Sesame first partnered in 2023 so Costco members could get low pricing for core health care services like virtual primary care, health checkups and virtual mental health therapy.

The new expanded partnership, announced Tuesday, applies to members in all 50 states. It comes shortly after Lilly made it easier for patients to gain access to in-demand weight loss drugs through its own telehealth service, LillyDirect.

FDA APPROVES ELI LILLY'S TIRZEPATIDE FOR WEIGHT LOSS

WeightWatchers, in a bid to turn around its business, also launched a program earlier this year that targets consumers who use weight loss-related medications.

It's called the WeightWatchers GLP-1 Program, and it offers "tailored behavioral support for individuals on a GLP-1 medication," according to the company.

Companies have continued to find ways to broaden access to these drugs all while medical professionals and drug manufacturers have continued to warn that they are not lifestyle medications .

With Sesame, the company said clinicians will first collect a patient's medical history and help determine appropriate diet, exercise and lifestyle modifications.

"When clinically appropriate, the clinician may pair these interventions with medications, subject to their availability," the company said in a statement.

Original article source: Costco launches weight loss program for members

A worker pushes carts outside a Costco Wholesale store May 31, 2006, in Mount Prospect, Ill. Getty Images

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Business Memberships allow you to purchase products for business, personal, and resale use at any Costco Wholesale location worldwide and online at Costco.com. One additional card is also provided for a member of your household at no additional charge. Like all Costco memberships, it’s valid for one year and must be renewed annually.

To sign up, we require some form of business identification, such as a business license, or three pieces of business ID. You can sign up online, but you’ll need to stop by the membership counter at one of our warehouse locations to show your ID and pick up your cards.

As of June 1, 2017, Business Members may also add additional cardholders at $60 each per year. Each additional card also includes a free household card.*

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Once an account is made through Sesame and has been verified with a Costco membership, customers belonging to the wholesaler can expect things like choice in their clinician, three months of clinical consultation, video consultation with the clinician, a nutritional guide and recommendations, and an “individualized, clinically-appropriate treatment program.”

Sesame claims it's the "most affordable weight loss program in the US."

The weight-loss program also includes access to GLP-1 prescription weight-loss drugs that have been sweeping the nation but will be on a patient-to-patient basis.

Injectable semaglutides like Ozempic and Wegovy and other oral weight-loss medications will be available only if a provider from Seasame finds the customer to be an applicable candidate, according to the program .

According to the Seasame, patients could lose 5% of their body weight within three months, 10% in six months, and 15% in a year if they stick with their individualized programs.

Costco rolled out the program on April 2 but has been working with Sesame since the Fall of 2023.

The New York-based telehealth company said its clinicians will collect a “detailed medical history from each patient” to plan “appropriate diet, exercise and lifestyle modifications” for individual subscribers.

“When clinically appropriate, the clinician may also pair these interventions with medications, subject to their availability.”

While the focus may be on its offer of virtual care, the company also has some in-person care available.

Costco started offering customers visits with a primary care physician through Sesame in the fall for as low as $29 a visit.

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However, the move to expand came after the two companies noticed that a majority of customers using the program were inquiring about help with losing weight.

“It wasn’t what we initially thought would make sense to offer for Costco members who were coming to Sesame,” Sesame’s other co-founder, Michael Botta, told CNN.

“But we realized pretty quickly, just by looking at what people were curious about, that there was a clear unmet need here,” he said.

Costco’s partnership with Sesame makes it the latest retailer to jump on remote access for third-party healthcare providers.

Amazon launched its remote healthcare platform, Amazon Clinic , in August, and Walmart offers in-store medical clinics for its customers.

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You can now get Ozempic at Costco — but don't expect big savings

Costco is now selling the weight loss drug Ozempic through a partnership with health startup Sesame.
Members can pay $179 for a prescription and appointment as part of a three-month package.
Still, that doesn't cover the cost of the GLP-1 drug, which has gained popularity but can be costly.

Silver bullion and sushi aren't the only new additions to Costco's product selection this year. Now, you can get a prescription for the weight loss drug Ozempic through the retailer, too.

Costco has started offering the prescriptions through a partnership with healthcare startup Sesame, CNN reported on Tuesday. For $179, members can get a prescription for the GLP-1 weight loss drug plus a meeting with a doctor or specialist. Members who get the drug are also able to message a doctor with questions or issues as they continue to use Ozempic.

One thing the program — which lasts three months and is renewable — does not include is the actual cost of Ozempic, which can run up to $1,600 a month without insurance, CNN reported. Getting insurance to cover the drugs is still tough for non-diabetic users, and some employers are worried that the costs could strain their finances.

Watch: Ozempic explained: how a miracle diabetes drug became the center of a weight loss craze

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Costco Announces Ozempic, Wegovy Prescriptions and New Weight Loss Program Through Partnership With Sesame Costco is expanding its no-insurance virtual medical marketplace.

By Sherin Shibu • Apr 2, 2024

Key Takeaways

Costco members can now access weight loss plans through the no-insurance, virtual medical marketplace Sesame.
The plans could include prescriptions for popular weight loss medications.

Starting Tuesday, Costco members in the U.S. have access to a new weight loss program through the company's virtual healthcare platform, Sesame, which will now offer prescription medications like Ozempic.

The Costco-only program is priced at $179 for three months of services for Costco members. It includes video appointments with Sesame clinicians who specialize in weight loss, prescriptions for popular drugs, such as Ozempic and Wegovy when appropriate, and support with unlimited messaging and nutrition and exercise advice.

However, the program does not include the cost of medications, which can range from $950 to $1,600 per month depending on the drug, or the cost of a lab test, which might be necessary to determine eligibility.

Related: Popular Appetite Suppressant Ozempic Can Be Made For Less Than $5 a Month, New Research Suggests

David Goldhill, Sesame's co-founder and CEO, told USA TODAY that the model allows the company to "make high-quality specialty care like weight loss much more accessible and affordable."

"The number one search term of Costco members seeking primary care on Sesame was around weight loss," Goldhill told the outlet.

Sesame doesn't accept medical insurance; the platform's bread and butter is out-of-pocket virtual appointments with medical professionals. The company stated that it keeps prices low by working directly with clinicians, who set their own prices and availability.

At the time of writing, the Sesame clinicians available for appointments through the Costco-partnered weight loss program had appointments open on the same day.

Drugs like Ozempic and Wegovy have exploded in popularity in the U.S. over the past few years, and health insurers are beginning to cover the weight loss drugs.

Related: These U.S. Health Insurers Will Now Cover Wegovy, the Wildly Popular $1,349 Weight-Loss Drug

Costco previously partnered with Sesame in September to offer $29 primary care checkups and $79 virtual therapy sessions to Costco membership holders.

Customers without Costco memberships can also access the weight loss program. The price of the three-month subscription for non-Costco members appeared to be $195 at the time of writing.

Related: 'Superior to Any Bakeries': This Costco Dessert Item Is Flying Off Shelves — By the Millions

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Costco Business Model
CostCo Business Model: Strategic Insights
Lecciones de estrategia comercial del modelo comercial de Costco
Costco's business model of Customer Exclusivity (2022)
How CostCo Makes Money: The Business Model Explained
Business Strategy Lessons From Costco Business Model

COMMENTS

Business Membership
A Business Membership includes one free Household Card,* and allows you to purchase products for business, personal, and resale** use. Your Business Membership is valid for one year at any Costco location worldwide, and at Costco.com. All memberships must be renewed annually. Once you purchase a membership, a membership number will be emailed ...
What is the difference between each type of membership?
Business Membership: $60.00 Annual membership fee*. Includes a free Household Card. Add Affiliate Cardholders for $60 each*. Valid at all Costco locations worldwide. Purchase for resale. Business Members must provide Costco with the appropriate resale information. Gold Star Membership: $60.00 Annual membership fee*.
Costco Business Model
A brief history of Costco. Costco began in 1976 when Sol and Robert Price opened what would be the first exclusive warehouse for business shoppers. Over the next three years, Price Club would grow to have more than 200, 000 members and $1 million in profit. The first Costco warehouse (with Price Club as its parent company) was opened in Seattle, Washington in September 1983.
Business Strategy Lessons From Costco Business Model
Costco's strategy can be summarized as primarily a selection of high-quality items sold in bulk in warehouses around the US and Canada, with a substantial part of its business focused on selling merchandise at a low-profit margin. Costco also uses a single-step distribution strategy to sell its inventory before it gets paid to suppliers. Costco generated almost $242.29 billion in revenue in ...
Costco's Mission, Business Model, Strategy & SWOT
Mission. Costco's mission is " to continually provide members with quality goods and services at the lowest possible prices. " This mission statement is directly linked to its business model and strategy. The firm's mission emphasizes quality and cost leadership, which are factors consumers usually look for in the retail market.
Costco Business Model Explained: The Things That Led to Its Success
Costco's business model relies on budget-friendly shopping that helps the company maintain its competitive edge. Its operations function on membership-based warehouses; The retailer is known for offering more employee benefits and better wages compared to many of its competitors;; Its plans revolve around minding climate change and doing something about it, expanding the business even more ...
Costco Quote Small Group Health Insurance Marketplace
The CBC Health Insurance Marketplace for Costco Members is your central hub for Individual, ... Scroll down to see how Costco can help you and your business or click "Let's Get Started" below to get a quote now! ... Plan benefits and rates are based on final enrollment and insurance carrier confirmation. L0317492651[exp0418][All States] ...
Costco Plans to Open 31 New Locations in 2024
Advertisement. Costco plans to open 31 new locations this year, including approximately 24 in the US and the company's sixth location in China in early 2024. CFO Richard Galanti announced the news ...
How can I add additional members to my Business Membership?
Once your membership has been verified, select the Business Details section to manage your additional cardholders. Visit the membership counter at any Costco warehouse. You'll find locations and phone numbers for all of our Costco locations right here. Give Member Services a call at 1-800-774-2678. Fax your request to 425-313-6870 (Attn ...
How Costco Makes Money
Revenue grew 2% year over year ( YOY) to $53.6 billion. Operating income, which the company uses as a profitability metric for its individual business segments, decreased 6.3% YOY to $1.68 billion ...
Small Business Program
Small Business Program for you! Bonus activation credits per line with select business plans 2. 1. Rogers. SAVE 10% off your monthly offer available to small business Costco members with proof of business ID who activate, add a line or upgrade to a new device on select Rogers Infinite plans with financing at participating Costco locations.
Costco plans to open up to 28 stores this year
Jan 12, 2022, 3:46 AM PST. Costco. Noam Galai/Getty Images. Costco plans to open as many as 28 stores in 2022, per a Wall Street Journal report. The warehouse chain is planning to invest $4 ...
Costco health insurance marketplace for businesses
The Costco business health insurance marketplace works with Custom Benefit Consultants (CBC). Costco Insurance Agency, with CBC, helps to connect business owners with health insurance plans for their employees. The marketplace provides business owners with access to medical, dental, vision and other group benefits that they can offer to their ...
Costco Business Center
Shop Costco Business Center for a wide selection of Office Supplies, Candy & Snacks, Disposables, Janitorial, Grocery and more for business and home use. Delivery available to businesses within our local delivery zone in select metropolitan areas.
Big Changes Are Coming To Costco In 2024
According to Business Insider, Costco has plans to erect a warehouse over 240,000 square feet in size in Fresno, California. This would become the company's largest location by a landslide, overshadowing its current largest space in Salt Lake City, Utah, which sits at 235,000 square feet. While only a portion of this massive location would ...
Costco Business Center
Costco Business Center offers a range of products and savings for your business needs. Whether you need office furniture, same-day delivery, or grocery items, you can find them online or at your local warehouse. Shop your way and save more with Costco Business Delivery.
Buying a Cell Phone at Costco Wholesale: 4 Things To Know
Costco used to be one of the best places to buy a new cell phone or phone plan. However, the kiosks that used to offer the best deals shut down last year after the vendor went out of business. Recently, Costco's phone kiosks have reopened, but the deals aren't exactly the same.
Costco Just Announced Major Growth Plans With 33 New Locations ...
During an earnings call with investors on Dec. 14, Costco CFO Richard Galanti announced that the company plans to open 33 locations during the 2024 fiscal year. That's notably higher than the 23 ...
When will Costco raise its $60 annual membership fee?
Costco members can rest easy—for now. The wholesaler earlier this month did not increase its $60 annual membership fee during its earnings call, but that doesn't mean it won't in the future ...
Costco launches weight loss program for members
FOX Business Flash top headlines for April 2. Costco is jumping into the weight loss game by giving members access to sought-after medications such as those made by pharmaceutical giants Eli Lilly ...
What is a Business Membership?
Body. Business Memberships allow you to purchase products for business, personal, and resale use at any Costco Wholesale location worldwide and online at Costco.com. One additional card is also provided for a member of your household at no additional charge. Like all Costco memberships, it's valid for one year and must be renewed annually.
Costco offering weight-loss drug prescriptions to members for $179
Costco rolled out the program on April 2 but has been working with Sesame since the Fall of 2023. David Tucker/News-Journal / USA TODAY NETWORK. The wholesaler announced on Tuesday that members ...
Costco begins offering Ozempic prescriptions to some members
Some people go to Costco for its $1.50 hot dogs, others for its $179 Ozempic prescriptions. The warehouse retailer is now offering its US members access to prescriptions for GLP-1 weight loss ...
Is Costco Wholesale Planning a Stock Split? 1 Thing Management Might Be
One prime stock split possibility that investors may be wondering about is Costco Wholesale (COST-1.38%). At around $730 per share, it's one of the more expensive stocks on the S&P 500 .
You can now get Ozempic at Costco
Costco is now selling the weight loss drug Ozempic through a partnership with health startup Sesame. Members can pay $179 for a prescription and appointment as part of a three-month package. Still ...
Costco Launching Weight Loss Program, Ozempic Prescriptions
Costco members can now access weight loss plans through the no-insurance, virtual medical marketplace Sesame. The plans could include prescriptions for popular weight loss medications.