Costco's Business Model Compared With Competitors

1. Differences in Costco’s business model compared with competitors such as Walmart, Sam’s Club, and other retailers are quite significant. Most revealing of all would be their treatment of their hardworking employees, setting an example for other retailers. According to the article, “The company pays its employees on average 40 percent higher than competitors and offers health care insurance to all employees who work more than 20 hours per week.” This results in a lower job turnover rate in the company. Costco’s sales strategy also plays a role in its business model. In the article it states, “They only sell a limited number of brands and, as a result, they are able to increase sale volumes...” This allows the company to buy in bulk and receive

I am incredibly surprised that Costco would be able to sell cars, considering that they are expensive to have, let alone buy. But considering Costco’s ability to save money for themselves and customers it is not too out of the question. By selling/renting out cars, Costco opens itself up to a whole new market of consumers. Such as college students looking for a way to get to school and back; couples looking to trade in for newer vehicles; and people who want to buy a fancier car they have been saving up for. No matter the business the company does, it needs to fulfill a need (or market) that the community wants or needs. The business strategy is built around what the community wants, not around them. If it were built around them, no markets would exist. Diverse products produce more markets, customers, revenue, and of course satisfaction for everyone involved. No wonder why Costco is considered one of the biggest retailers in not in the United States, but in the world. 4. Today, online shopping is more popular than ever, we have seen companies like Amazon start out from nothing, to becoming one of the largest in the world. As this shift starts to occur, we start to see normal brick-and-mortar stores decline in sales. Costco being one of them, despite their having a modern website. Their business model is constructed on having customers come into the physical store and purchasing the products from there. If Costco starts to sell more of their products online, then it will cost the consumer more to purchase. With packaging, fees, and mishandling of merchandise; it can lead to a massive expense for Costco. This will eventually force them to raise prices, leading to unhappy customers and loss of business. Selling online can be massively detrimental to Costco’s set business model and will require a new business plan. However, despite all of this; Costco has made, according to Statista, “14.8 billion,” meaning that a new plan focused more online could be all Costco