ipl-logo

Costco's Business Model Compared With Competitors

696 Words3 Pages

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 …show more content…

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

Show More
Related
1117 Words | 5 Pages

According to the statistics in 2015 Costco made 116.2 billion compared to Sam’s Club 57 billion. How is it possible that Costco is beating Walmart and Sam’s Club? Costco has 671 stores and Sam’s Club has 647 but one Costco store makes double what one Sam’s Club makes in revenue a year. Costco pays their employees better than Sam’s Club for example a cashier will start off at 13/hour compared to Sam’s Club at 9/hour this alone will create a better work culture.

Read More
451 Words | 2 Pages

Based on this intensive growth strategy, a strategic objective is to offer products at affordable prices. Home Depot’s cost leadership generic strategy supports this intensive growth strategy. To enhance its product selection, the company has developed strategic alliances and exclusive relationships with suppliers to market a variety of well-known brand names (Home Depot Product Authority, LLC, 2016). Lowe’s competitive business level strategy is a low-cost provider. Lowe’s is able to keep costs low through by purchasing in large quantities from suppliers, buying directly from manufacturers, using technology to control costs, and setting up distribution centers to service area stores.

Read More
376 Words | 2 Pages

Do you like shopping? Both Costco and Sam’s Club are very popular stores. They are both in the top ten biggest retailers in the world. They bring in a ton of money to the people that own them. They are both Warehouse Clubs, which means they are massive stores that require a membership to enter.

Read More
755 Words | 4 Pages

Costco take pride in mentioning about their low prices, also low gas prices and how they try very hard to keep it that way for their members. I feel that they always focus on this and even in news articles, I hear hoe Costco is trying to keep their cost low for their members. Management also talks about the company's performance, operations, and strategic plans in fiscal year 2022. The management discussion includes a full examination of the company's financial statistics, including sales, net income, and profits per share.

Read More
898 Words | 4 Pages

Costco's focus on driving sales also helps explain why it offers better pay and benefits than competitors (Luts 2014). The organization attempts to retain employees while trying to grow sales and increase consumers but they recognize the need to compensate their employees properly. Costco members know that the warehouse store has consistently lower prices when compared to traditional grocery stores. While other stores may have occasionally lower prices on their loss leaders, Costco has permanently capped its margins to ensure that members can justify paying for a membership. The word average is important in that explanation.

Read More
572 Words | 3 Pages

The online retail market, including the one of CanGo, has achieved an increased growth of about 18% during the years of 2009 thru 2012. Conventional retail store sales grew at a rate of 1.3% during the same timeframe. Although the United Kingdom appears the leading nation in online business sales, the market shares in the United States makes it the second leading nation as the online business sales are notably high. For example, the United States were able to see roughly $186,942,000 in internet sales in the 2012 alone keeping in mind that this value only accounted for about 6.5% of the aggregate retail sales volume that was recorded across the nation at that time. The average online consumers are believed to be individuals whom have average levels of literacy and a steady source of income.

Read More
554 Words | 3 Pages

Cutco has targeted the high end of that market and created a corporate culture based on maintaining the highest quality standards. In the marketing strategy employed by Vector marketing, the company that manages the sales force for Cutco, customers have the ability to share their personal stories of family and times when their Cutco product has helped or served them. Thousands of customers have written stories to the company to express how their products have affected their lives, it is these stories that create lifetime customers and appeal to other consumers when looking for what they want. Vector calls this the friends of friends approach to marketing and it is very successful in this case as annual sales are over $200 million. I believe that there is more money to be had if they mass produce and used either retailer or wholesaler channels, but Cutco isn’t willing to sacrifice the quality for the

Read More
581 Words | 3 Pages

In addition, Costco does a great job in their internal growth process with hiring (Loeb, 2015). Costco’s purchasers do well as they know their store locations and the local demographic’s desires. For instance, in Australia, the Costco there like Vegemite, so they have that there and not in U.S. locations (Loeb, 2015). Costco is smart with their distribution chains as they usually use 65% of local bought and specific products (Loeb, 2015). Globally, Costco has built trust within their brand as customers go to them for quality service, freshness, and a great selection of products.

Read More
671 Words | 3 Pages

According to an article in US News and World Report, back in 2000, for every dollar spent at physical stores, just 30 cents were spent online and at mail-order houses, according to government figures. Now, the online category makes up nearly 70 cents for every dollar spent at general merchandise stores. Additionally, online shopping has attuned customers to focusing on price and hunting for the best bargains, thereby shrinking profit margins at many stores (D'Innocenzio,

Read More
665 Words | 3 Pages

Their business has lost needed revenue income the last few years because of the easiness of web based shopping. With the increasing competition from web based business it has quickened their decline; their decrease in revenue is essentially owing to the expanding number of significant players that have extended their item range to incorporate basic supplies, which moves their income to the big Warehouse Clubs and Supercenters industry with stores such as Costco and Walmart. This market trend is expected to stay the same throughout this year and for the next five years as well. Over the last five years, the company has improved its performance significantly by shifting from the negative sales growth phase to positive sales growth arena. They announced they would close over 67 in the next year and they will close another 30 stores that have leases that are up for renewals.

Read More
776 Words | 4 Pages

Costco does not have an effective social media marketing strategy. Despite using some social media tools such as Facebook, Twitter etc., Costco has a severe lack of presence in the social media world due to an ineffective strategy or lack thereof. Their Facebook page gives very little information about any events or offers available and often directs customers to Costco.com in order to get any proper information about their products. Poor use of social media as an effective form of advertisement has seriously reduced their potential customer base. They need to develop a marketing strategy that can incorporate social media for use in marketing and

Read More
1008 Words | 5 Pages

Currently, Costco and similar retailers are not active in the market of Cyprus. In order to determine if a warehouse retailer would be successful in such a market, several analyses should be conducted. The geopolitics, economics, and sociocultural aspects of the market of prospect should be examined. Qualities of the competing market and the company’s target market should be compared. A retailer’s success in a market is influenced by economic conditions, the characteristics of the population, and market trends.

Read More
1283 Words | 6 Pages

Their first location was 100% company owned. They managed to do this successfully through extensive local media coverage of the company’s anticipated product offerings, a unique business style, and employee welfare schemes. Costco also gained the attention of suppliers at both local and national levels who were eager to forge business links with the warehouse giant. (Park; Viswanathan; Gopinath; Parveen; Furey, 2019). While it met its domestic product needs in Spain, Costco also planned to use these suppliers to supply products to its other locations worldwide.

Read More
729 Words | 3 Pages

Specifically, Ralph’s (similar stores are Vons and Albertson’s) and Whole Foods (similar stores are Gelson’s and Trader Joes) are two firms that utilize cost leadership and differentiation. On one hand, we have Ralph’s using cost differentiation by providing a broad range of merchandise at a decent price. On the other hand, we have Whole Foods that has implemented a differentiation strategy by marketing their merchandise as healthier (organic). The trade of for both companies is that they are attracting less consumers by just marketing to a specific crowed. For instance, if Whole Foods had lowered their price and still sold premium merchandise, soon Ralph’s would be in trouble.

Read More
989 Words | 4 Pages

Costco is high aggressiveness retail firms due it sells

Read More

More about Costco's Business Model Compared With Competitors

Related Topics

Open Document