Pros And Disadvantages Of Costco

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In 1983 the combination of two companies Price Club and Costco Wholesale created the store we have now Costco. Costco is a membership warehouse club that delivers “high-quality products, at rock-bottom prices” (1 Geier) all while treating its employees fair as well with great benefits and high pay. The goal of the company seems to be to keep cost down so they can return their savings to the members. Costco also seems to be much better off than other big box retailers like Wal-Mart who have problems rendering from National & International labor issues, to poor customer service, low-quality products, empty shelves, and declining sales (1 Geier). At the same time Costco is holding those strong sales and famously known for the good wages and benefits…show more content…
One retail format being “Costco Home” which focuses on home furnishings and improvements similar to common retailers like Menards, Home Depot, etc. They expand these opportunities to decrease the risks that follow with operating a business; there are only currently two stores that are representing this format as a home improvement store, according to Ilovecostco.com (1) which will change soon. And another retail format of Costco is known as “Costco Business Center” which, is a drop-shipment program, as it is for all warehouuse members, but only for those that are able and willing to spend the minimum requirement of $10,000. The business center offers delivery via a private fleet of trucks. There are actually some areas that have a actual brick-&-mortar location for business owners who prefer to shop in person, while others are strictly delivery-only for businessowner supplies (1 Ilovecostco.com).

Company Background- From Price Club to
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Selection of goods was limited by still offering the broad range, but not the depth and consequent inventory burden of the typical department store. Products were bought in bulk directly from the manufacturers. Membership was initially limited to small business owners, with the membership fee offsetting overhead costs. The store also refused to accept credit cards, in part to avoid the cost of their administration and credit card fees of as much as 1.5%. Price’s first year went poorly, with losses of $750,000 on sales of $1 million. Price Club responded by broadening its membership base to include members of selected credit unions, savings and loans associations, and government, utility and hospital employees. By 1978, Price had recovered sufficiently to open its second warehouse in Phoenix, Arizona. The Price Company continued to expand, by opening two more stores when it went public in 1980. In 1983, Price was suddenly faced with new competitors who were successfully copying the Price Club idea for example, Walmart’s Sam’s Clubs, Kmart’s PACE Memberships Clubs, and Costco. By 1984 it had added 16 new stores, entering New Mexico and Virginia. Price moved into Maryland and
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