[Stu from NYC]

Originally Posted by ElDiabloJoe

I saw a business insider show/documentary/expose one time on Costco. Ya know the secret to their very low prices? They essentially sell everything at their operating and procurement costs.

Their business model is memberships. They make their money not on the products they sell, but on the memberships they sell. They will always be able to sell for less than everyone else with that model because they are essentially selling at cost - and with their volume and market control and distribution network, that cost will always be lower than anyone else's. Their ownership of the trucks, the warehouses, the stores, the land, etc. insures them maximum control over costs, operating procedures, and quality.

Nope, they make their profit on the annual membership fee, and use their product pricing to fuel people buying and keeping memberships.

Fairly unique, I would say, and explains why they can do what Sam's and BJ's just cannot.

Do not know if this is true but years ago someone who worked for a company that was a big supplier to Sam's said they do the same thing.