Comparing Costco, Sam's Club, Walmart, And Target

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In this wholesale retail industry, the major key players are Costco, Sam’s Club, Walmart, and Target. Other e-commerce businesses like Amazon are also considered the rivals of Costco and other primarily brick-and-mortar businesses. The level of rivalry among existing players is high due to many reasons. First of all, it is easy for the customers to switch their memberships if they are unsatisfied with the company’s products or services. Since the annual fee of membership at Sam’s Club is ten dollars lower than that of Costco, Costco customers can switch their membership to Sam’s Club anytime they want. Many wholesale retailers have similar items, which means that there are no product differentiations among the companies. In addition to that, …show more content…

First, high capital requirement makes it harder for other companies to launch the business. The wholesale retail industry requires the company to offer a wide product category, and therefore the size of the store has to be big enough to carry all the products. At the same time, new entrants should launch their businesses in places where there is a sizeable population. It would probably be better to start the business in major cities in order to gain awareness and mass consumers. Targeting major cities would put high initial costs for any new entrants. Not only that but the company should also be able to expand the stores rapidly both domestically and internationally in order to compete with key major companies in this industry. However, entering the business globally would not be easy for new entrants because they are not likely to have competitive advantages as much as the key major companies do. Having first-mover advantages, Costco and Walmart pretty much have high economies of scale. Because they have been in this industry for a long time, they are more likely to have a good relationship with suppliers. Any new entrants would lack the relationships that Costco and its rivals have established with many suppliers and customers. Therefore, new entrants will have a difficulty gaining a cost

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