Sales model Costco

costco warehouse interior in mountain view, california

costco focuses on selling products @ low prices, @ high volume. these goods bulk-packaged , marketed large families , businesses. furthermore, costco not carry multiple brands or varieties item same except when has house brand sell, kirkland signature label. results in high volume of sales vendor, allowing further reductions in price, , reducing marketing costs. typical costco warehouse carries 4,000 distinct products, while typical walmart supercenter carries approximately 140,000 products.

if costco management feels wholesale price of product high, refuse stock product. example, on november 16, 2009, costco announced stop selling coca-cola products because soft-drink maker refused lower wholesale prices. costco resumed selling coca-cola products on december 14, 2009. costco saves money not stocking bags or packing materials; carry out goods, customers must use shopping cart, bring own bags or use empty merchandise shipping boxes company s vendors.

lighting costs reduced on sunny days, costco locations have several skylights. during day, electronic light meters measure how light coming in skylights , turn off appropriate percentage of interior lights. during average sunny day, normal center section of warehouse not have interior lights in use.

most products delivered warehouse on shipping pallets , these pallets used display products sale on warehouse floor. contrasts retail stores break down pallets , stock individual products on shelves. products have 8% 10% markup, while kirkland signature brand products have 15% markup. company runs lean, overhead costs @ 10% of revenue , profit margins @ 2%. has no public relations department , not buy outside advertising. costco s annual membership fees accounts 80 percent of costco s gross margin , 70 percent of operating income, therefore costco collects of profits 12 months in advance unlike businesses.