Warehouse buying and buying in bulk can offer a lot to some customers and to others they may see it as spending way too much money for what they need. This all depends on what kind of services, products, pricing and delivery the business has to offer to their customers. Costco Warehouse which is a wholesale provider for members only that allows for the members to shop and buy in bulk. The companies, marketing mix is focused on pricing and the value of the products they carry. It is intended to attract small businesses, individuals and to also attract customers by offering great deals and different types of services to them as a member. Customers are able to choose the basic membership which is just your yearly membership fee ($60) or the executive membership which is twice the amount ($120) of the basic membership but you earn two percent cash back each year. According to The Academy of Management Perspectives “Costco’s business model is based on that of Sol Price: sell a limited number of items, keep costs down rely on high volume, pay workers well, have customers buy memberships, and aim for upscale shoppers, especially small-business owners.” (Cascio, 2006) …show more content…
The warehouse offers products such as appliances, clothing, handbags, computers, electronics, health & beauty, jewelry, office products, grocery, pet items, home items, gift cards etc. The Costco Services which supports all member’s needs from mortgage services, life insurance, payment processing, auto program, identity protection, dental plans, parts and service discounts, travel discounts etc. The company also has its own in store services, tire service, pharmacy, optical center, hearing aid center, photo center, propane and gas station which provides savings/discounts and rebates on products sold through these
Product: Costco doesn’t have a lot of product options, with usually only a few different types of the same product. But they offer a huge variety of products as they aim to be a one stop shop for everything the consumer needs. They also offer a variety of services such as photo printing services, car rental, and even life insurance.
Associated Wholesale Grocers (AWG) came into being more than eight decades ago when several independent retailers decided that the power of a cooperative far outweighed the influence of any one individual retail grocer. AWG provides distributor services to independent grocers in over 30 states with nine distribution centers throughout the South and Southeast regions of the country. In addition to their wholesale foods department, AWG offers a myriad of services from new store design, construction, marketing, product placement and “world class” logistical consultation (cite 11). AWG faces many of the same logistical challenges that other similar wholesalers face to include rising fuel costs, inclement weather, stringent timelines and an ever evolving need for stringent quality. One method to exploit a business’s positive and negative attributes is through the use of a Strength-Weakness-Opportunity-Threat analysis, or SWOT analysis (Cite 11). If used correctly, the analysis results can give insight into potential market areas of expansion and expose vulnerabilities to senior leadership so that they can be mitigated. AWG looks at its Supply Chain Management (SCM) as an integral part of its core business offering multiple services such as logistics to new co-op members. The team members of AWG are positioning themselves for sustainable success, now and in the future.
Costco Wholesale Corporation was an uncommon type of retailers called wholesale clubs. These clubs differentiated themselves from other retailer by requiring annual membership purchase. Especially in case of Costco, their target market is wealthier clientele of small business owners and middle class shoppers. They are now known as a low cost or discount retailer where they sell products in bulk with limited brands and their own brand. The company is competing with stores like Wal-Mart, SAM’s, BJ’s, and Sears.
Costco Wholesale Corporation is an international chain of membership warehouses operating on the concept that offering members lower prices will produce high sales volume and rapid inventory turnover (“Annual Report” 4). While Costco warehouses are designed to help reduce costs for small-to-mid-sized companies, memberships are also available for individuals (“Company Profile”). The two memberships offered by Costco include Business and Gold Sta...
Costco also entices their customers with low prices on designated set apart products available only at their stores. Within these designated products, Costco provides a limited selection of nationwide brand-named merchandises in some wide categories. Their approach comprises of selling a limited number of items, keep their costs down, maintain a high volume, compensate employees well, ensure that customers buy their memberships, and target upscale small-business owners through their business only
Lastly, the stores and warehouses are not communicating well which is resulting in confusion for both parties. Store managers waste time by having to spend store hours on the phone with the DC to expedite demanded stock. This time waste can be avoided by properly organizing the warehouse and having informed workers who can get the job done right and on time. Also worth mentioning is the current condition of the warehouse; there is inventory underneath conveyors and scattered across aisles, making it harder to track down stock. Analysis &
Key Issues: At the end of 2012, Costco was a successful business; however, there are some issues that they would need to deal with. These issues mainly arise from their previous successful ventures as a warehouse wholesale company. The first issue is that Costco has competitors that can actually be and are a threat to their success. Competition allows a company to improve itself and prove its prowess to its customers. However, when a competitor is able to provide the service at a much reduced cost, problems will arise.
In addition to Amazon great physical networking presence with all of their warehouses they also have a great delivery network that allows businesses to sell their goods through Amazon. Having many warehouses spread out helps getting products delivered quicker and cheaper than many smaller businesses can. Smaller businesses sell their goods via consignment with Amazon. Selling their goods using Amazons delivery and website services helps keep cost for small businesses down despite the fees paid to
From the video, one can describe Costco’s business model, which includes: high volume purchasing, efficient distribution, reduced handling of merchandise, high operating efficiency; low price, limited selection of quality merchandise and rapid inventory turnover. Operating efficiency and rapid turnover determine thin margins, but huge profit volume. From the business model, one could name several of multiple marketing concepts used by Costco. 1. Consumer Buying Behavior Concept
How does managerial planning for Project Impact take place at different levels within the organization?
The company also provides discount shopping (floral, jewelry, and safety
Because Dollar General does not sell in bulk, they tailor their supply chain to focus on more frequent deliveries of goods to smaller stores. Although this creates some inefficiencies relative to their big box rivals who were able to ship larger truckloads to their stores, Dollar General benefits from a denser network of stores in many areas as they had more than twice as many US locations (11,061) as Wal-Mart (4,807) in 2013. Additionally, Dollar General owns all trailers moving to and from distribution centers, but subcontracts trucking [dollar general 10K]. This reduces their necessary capital investment, while retaining key distribution activities including control of the loading, unloading and delivery scheduling of products to both retail stores and distribution centers.
“Logistic is the process of planning, implementing and controlling the efficient, effective flow of goods storage of goods, services and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements”
This essay describes how Costco has undergone evolutionary changes from its inception to present through its value chain model to become a success story. For example, in its distribution system, Costco utilizes the cross-docking technology to help in the conveyance of products in the different locations. This ensures that there are no product delays in the respective markets (Guo, 2016). Accordingly, Costco can attract more customers who prefer the warehousing services provided by the company.
From the manufacturers’ warehouse to the shelves, the business must orchestrate a symphony of the right products to the right places at the right times. Walmart serves customers and members more than 200 million times per week in retail outlets, online and on mobile devices. The company is able to offer a vast range of products at the lowest costs in the shortest possible time (Chandran, 2001). The main reason for this incredible growth of Walmart is because its distribution centers are highly automated.