Site Loader
Rock Street, San Francisco

Pricing authority

l Philosophyofprovidingmostconsistentlycompetitive
pricing.1(H)

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

Membership fees

l Withanannualfeeof$55,34millionsofpeopleare
currently a member of Costco. Compare to business
membership fee, 10.6 million people are paying $110 2
(H)

l With$2.65billion(fiscal2016)Costcoareusingitas
a way to reducing product price.3 (M)

In-and-out

l Rapid inventory turnover with high sales volume.4 (H)
l Highoperatingefficiencyisreachedbyhighsales

value.5 (M)

Consistency

l Profitmarginshaveremainedconsistentoverthepast
decade, leading to easy investing and debt needs.6 (M)

Customer appreciation

l CreditcardofferedthroughCostcoprovides2–3%
cash back on purchases.7 (L)

Size

l Second largest retailer and 15th largest in Fortune 500
index.8 (H)

l Year on Year growth of 7.1% (2015).9 (H)

Poor international presence

l

l

l

Heavy reliance on NA and Canada; California
provides 32% of all U.S. sales (2014). Any slowdown
in one state could hurt entire business.10 (H)
8%weredroppedinCanadawithcomparable-store
sales, combined with all other international locations
was down by 6%. 11 (H)
Withtheeffectofcurrencyfluctuations,international
revenue looks in US dollars. 12(L)

Exclusivity

l Costco’sexclusivitytomembersisadouble-edged
sword and can drive away potential sales.13(M)

Product mix

l Costcocarriesanaverageof4,000productsonits
shelves; Target carries 80,000; Walmart 150,000.14 (H)

l SellstoomanyproductsundertheKirklandlabel
(20%+).15 (M)

Product problems

l Productrecallsduetoe.coliandotheroutbreakshurts
reputation.16 (L)

Limitations

l Membershipfeesisoneofthemostimportant
elements to support Costco’s business model.17 (M)

Opportunities

Threats

l Sam’s Club and BJ’s Warehouse are constant
competitors and can sweep customers out from under
Costco.25 (H)

l Other retailers don’t require membership; also don’t
compete in general merchandise category.26 (M)

l Compare to Amazon who also has membership fee,
they have more variety of services. Such as video,
faster shipping and etc.. 27(H)

E-commerce

l Costco management has not invested adequately in e-
commerce; Internet sales growth of 11% Q1 2017
compared to 63% for Walmart. 28(H)

l E-commerce sales only make up 4% of Costco’s total
revenue.29 (M)

l Amazon Prime is siphoning away customers from
warehouses.30 (H)

Private label

l AldiandLidlhavewell-establishedprivatelabel
brands,competingwithKirkland.31(M)

Misc.

l Labor costs have been rising quickly between 2015 –
2018.32 (L)

l Politicalproblemswithintheiroperatingsphere.(L)33 

Post Author: admin

x

Hi!
I'm Dora!

Would you like to get a custom essay? How about receiving a customized one?

Check it out