You have to evaluate that, of course.
I’ve been researching the company, and I didn’t understand it as well as I should have. Now I’m thinking what’s the right entry point, but these are the most surprising aspects of the company I learnt:
- Focus. A large supermarket can have over 30,000 shopkeeping units (SKUs), but Costco has only 3,700 now. It focuses its buying power and gets better prices from suppliers as a results, and savings can be passed on to the customers.
- It offers an IRL freemium / subscription service. Costco operates warehouses, and only members can shop. In the US, the yearly membership starts at $60. Executive membership costs $120 / year, and it gives you an extra 2% off your shopping. Executive members tend to spend more and make up just under 39% of members. That reminded me a bit of Amazon Prime.
- Not really an e-commerce company. It’s started selling over the internet, and It does same-day delivery to US customers who live within a 20-minute drive of its warehouses, but internet sales still account for only 4% of annual revenues.
The most meaningful data for me is the growth of the memberships:
(source)
While the lack of e-commerce is something I dislike, this remains an interesting company on my watchlist.