Introduction
Costco Wholesale Corporation is a multi-national membership warehouse club, that specializes in providing items to its members at favorable prices. The company has a vision of making its shopping experience unique and highly regarded. Boasting a variety of stock, Costco prides itself on accessibility to particular departments and the provision of benefits to its members. The company’s operating philosophy has been simple – keep costs down and pass the savings on to its members. Costco’s large membership base and tremendous buying power, combined with a never-ending quest for efficiency, result in the best possible prices for its members.
The first Costco warehouse location opened in Seattle in 1983, becoming the first company
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They are dedicated to sustaining a high level of quality with warehouses containing around 4,000 stock stock-keeping units, unlike the majority of supermarkets that have 30,000. Their cautious decision-making process for stock, centered around: quality, price, brand, and features, allows the members to feel the value of what the company can offer. They believe in having an entrepreneurial spirit, to define their staff across all departments, with everyone striving towards the same goal of surpassing the members’ expectations. Costco is widely recognized for showing a high level of care towards employees in comparison with other Fortune 500 companies. They offer fair wages, along with attractive benefits, which is evident in the company’s positive workplace atmosphere, of creating positive, high-energy, talented …show more content…
Commonly, the company’s membership fees would surpass its total net income. Consequently, Costco’s business would operate on just under a break-even basis globally. This was evident with Costco’s remarkably competitive pricing strategy in comparison to the prices their members would be paying when making purchases at other stores.
Additionally, an important aspect of Costco’s business model would be its high volume of sales and quick turnover of inventory, facilitating its sales and receipt of cash for inventory before being required to pay their merchandise vendors – including when vendor payments were made advantageously early, achieving discounted prices. Therefore, rather than having to uphold a large working capital to enable suppliers’ timely payments, Costco was able to invest a significant portion of its merchandise inventory through payment plans those vendors