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0 pointsjohnvanommen8y ago0 comments

Costco is an interesting case. Their profit is based on membership fees. That's why they're so fixated on customer service and happy employees.

For instance, Wal Mart makes more money if you shop their frequently. They have a vested interest in selling you products.

Costco makes their profits off the membership. So whether you shop there once a year or once a week, they continue to get that membership revenue.

On a side note, I wonder if that's the reason that lines at Costco are so miserable and their hours are so short? Perhaps Costco would prefer that you just stay home? Conversely, my Wal Mart is open 24hrs a day and the checkout process takes a couple minutes.

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dragonwriter8y ago

> For instance, Wal Mart makes more money if you shop their frequently.

So does Costco; they are profitable even before membership fees, and that's including fixed costs; so more unit sales means more profits. But the membership fees are pure profit on top of all that (and actually encourage people to shop more.)

> On a side note, I wonder if that's the reason that lines at Costco are so miserable and their hours are so short?

IME, the lines are long because of the quantity of items people tend to purchase (but they also move quickly for their length.) The hours are short because hours with low sales volume accumulate costs quickly.

> Conversely, my Wal Mart is open 24hrs a day and the checkout process takes a couple minutes.

IME, checkout at Walmart is much more variable than Costco; the average may be less time, but the range seems to go much higher. The longer hours, including hours with very low staffing, contribute to that, because there's more opportunity for staffing to not be aligned to a cluster of customers.