Costco Gets It

I’ve mentioned before how much I love Costco.  In the land of retail, I don’t think there is another company that can claim such a loyal following from both it’s customers and employees.  What’s interesting is that their formula doesn’t require a college degree to understand.  Stick to a core set of priniciples that put the customers first, and employees second and the market will love you.  Sure, they’ve had their share of whiners on Wall Street, but the bottom line is that they’ve delivered great financial results for a LONG time and have given a solid value to investors.

This article talks at length about this.  I’d recommend reading it.  The $50 annual membership feels a little steep, but I pay it because I know that I get far more than $50 in value by shopping there each year.  It’s refreshing to do business with a company that I can trust to deliver solid values to me every time I shop there.  Knowing that they aren’t taking any more than a 15% profit on any items in their store helps too.  I was surprised to see that they generate $1.2 billion in membership fees each year and that translates in to a significant percentage of their profit.

http://articles.moneycentral.msn.com/Investing/Ext…

Oh and as a final side note, one of the reasons’ for Costco’s growth is their really excellent return policy. Savingadvice gave it some good coverage, so check out their article if you get a chance.

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Comments

  1. Tim says

    There is absolutely no reason why someone who is going to buy a costco membership does not buy the executive membership instead of the standard membership. Yes, it costs $100, but you get 2% cash back rebate (use at costco) at the end of the year. Combine that with using a costco american express card, and that is a good deal. costco membership policy is such that if you get the executive membership and do not earn back the $100 to pay for the card, you can return the rebate check and get refunded to the standard membership. So you will always only have to pay $50.

  2. says

    Yes, there’s really no reason not to get the executive membership except for laziness (see myself). I have one, but I never come close to making my money back. So I’m thinking of getting rid of it so that I don’t have to ask for the refund every year.

  3. Hazzard says

    Thanks for the tip on the executive membership. I guess there really isn’t any reason that I shouldn’t go get it. Is it $100 per card? My wife and I each have a card so I’m not sure if it’s worth $200 a year.

  4. Tim says

    Hazzard,
    you can have two cards per membership family. So one for you and one for your wife, under one membership.

  5. Andy says

    I have executive membership plus Costco Amex card.

    I get 2% back from the membership + anywhere from 1-3% back from Amex cash back card. No annual fees on Amex card.

    When wife and I signed up for the executive membership, we figure we have to spend around $5000 to make up that $50 difference between regular membership and executive. It is sad to say this, but it is TOO EASY to spend $5000 at Costco each and every year. We’ve been an executive member since 2004, year we bought our house, and we gotten rebate checks over $100 each and every year. Last year was I believe $169.

    Well, it is not for everyone, but if you do the math, it is a card for everyone, if you are a costco member.

    Well, just my 2 cents.