Costco Business Model Insights

Costco operates a unique retail model by offering bulk goods in a warehouse setting, charging membership fees, and maintaining low prices through strategic purchasing and its Kirkland brand. The company originated from Price Club and has grown by focusing on limited product selection, employee satisfaction, and shareholder value. This approach has led to significant financial success and customer loyalty.

What is the initial impression of Costco's store layout?

• A small and cozy shop

• An outdoor market

• A sleek and modern retail space

• A giant warehouse filled with bulk goods

Who founded Price Club, the precursor to Costco?

• Jeff Bezos

• Sole Price

• Sam Walton

• Jim Senegal

In what year was the first Costco store opened?

• 1976

• 2000

• 1983

• 1990

How does Costco manage to keep its prices lower than typical retailers?

• By charging high prices for memberships

• By marking up items by 25%

• By selling only luxury items

• By buying in large volumes and passing savings to customers

What is the average markup percentage on items at Costco?

• 11%

• 25%

• 30%

• 50%

What is one way Costco reduces shipping costs for its products?

• By reducing the number of products

• By outsourcing shipping to third parties

• By changing the shape of containers to optimize space

• By using smaller trucks

How many products does a typical supermarket stock compared to Costco?

• 15,000 to 60,000 products vs. 4,000 products

• 5,000 to 10,000 products vs. 1,000 products

• 10,000 to 20,000 products vs. 2,000 products

• 20,000 to 40,000 products vs. 8,000 products

What is the primary source of Costco's financial success?

• High product prices

• Membership fees

• Government subsidies

• Exclusive online sales

What percentage of Costco members renew their membership annually?

• 100%

• 50%

• 90%

• 70%

How does Costco's treatment of employees contribute to its success?

• By providing free meals

• By offering them stock options

• By paying them minimum wage

• By paying higher wages and encouraging long-term employment