Costco Capitalism

https://www.bryanlehrer.com/entries/costco/

by exolymph • 6 years ago

294 285 6 years ago

Pfhreak3• 6 years ago

For those who aren't aware, not only does Costco pay well (I was earning $13/hour back around 2004), they also offer good benefits. I got healthcare, 401k, dental, vision, and time and a half on Sundays. And I was just a food court/service deli employee. Things got even better when I became a food court supervisor.

The mantra I heard, over and over, while I was there was "Hire good people, treat them well, and the rest takes care of itself."

duxup6• 6 years ago

That's a pretty good quote.

I'm always amazed by how many places cut corners on employee benefits and pay and then spend endless effort dealing with turnover and the results of poor employees.

TheSpiceIsLife• 6 years ago

My suspicion is, the people who make those decisions are themselves poor employees.

abarringer• 6 years ago

I find that if you treat an employee like a race horse they won't turn out to be an old nag. Obviously there are outliers but generally there is a positive feedback loop.

rchaud• 6 years ago

The CEO signs off on a decision to cut benefits or other employee incentives, often as a short-term measure to cut costs and improve margins. The negative effects of that will be borne by the store managers and ultimately the customers.

Excrement flows downhill.

tjr2252• 6 years ago

The people I knew that worked there(in IT) said it was an absolute nightmare with low pay and poor management.

That said, they aren't a tech company so...

Pfhreak3• 6 years ago

That I would believe. I worked in the warehouse, not in headquarters. But the systems we used to look up and track inventory were basically terminals. Old school green and black terminals with arcane commands.

I would absolutely believe that they don't want to try and compete with the tech sector for talent, and their management doesn't have the same understanding of tech that they do of running a warehouse business.

LilBytes2• 6 years ago

Costco might be fantastic to work for when you're front of house staff, but IT staff in the retail sector are nothing short of expendable. I lasted 9 months in my first and only retail job and the shocking standards that the company enforced.

I've worked in IT for the retail sector and I'd never, ever do it again. I was a Dev/System Admin/System Engineer/DBA/Network Engineer & Help Desk person. I needed a job rather desperately and took the first one that was available to me which at initial view I thought was promising.

As an example, if you worked on call which was restored 1 in 3 weeks, you didn't earn anything extra in wages on the days you were on call. But instead I earned 0.5 hours of TOIL for every hour that I was restored on which was from memory. 07:00-20: 00 Saturday, Sunday and Public Holidays. And 07:00 -> 09:00 and 18:00 - 20:00 Monday to Friday.

I would get calls at all hours because we supported retail stores in New Zealand, Australia, US & Canada. We had local staff in those areas but for the gaps in follow the sun support we had the on call person fill that role.

This might have been a good deal if you didn't get many calls. But for the larger part it was a full time day of work on Saturda, Sunday and Public Holiday when _no one was working_ except the on call person. And on an evening and first thing in the morning for shop close and open you frequently got calls before and after your shift started. All for 0.5 hours for every hour worked!

This doesn't even begin to cover the problems we had with retaining staff (understandably) and an absolutely awful work environment. My manager did his best to foster a positive work environment but the C levels clearly had no desire to do anything but bleed their staff dry.

Wrapping up my tirade, it wouldn't surprise me if this was the standard across the retail industry for IT staff and developers. Based on those I've spoken to outside of my own personal experience, this seems to be close to true. For all the glory that Costco holds for paying higher than average wages, I'm certain their IT department fucks over it's staff in a way that closely resembles my own.

inferiorhuman10• 6 years ago

I'd expect that (similar to public sector jobs) Costco pays well at the low end, but salary for more skilled jobs isn't competitive. Their web site is atrocious though.

tptacek• 6 years ago

What's the reference point? To other technology roles at other companies?

rizzom5000• 6 years ago

It's interesting to note that their website was down for hours last Thanksgiving sale. It is estimated they suffered 11M in losses during the outage.

alexpetralia• 6 years ago

This is obviously what any sensible and thoughtful manager aspires to, and yet it is still so rare. Are there tradeoffs we aren't considering? Why is this such a self-evident ideal, yet rarely achieved in practice? There must be good reasons..

BurningFrog2• 6 years ago

There are only so many good people.

Someone has to hire the bad people.

peterwwillis• 6 years ago

I think the main reason is a failure to properly understand the employee.

Most employer-employee relationships [in the US, anyway] are akin to serfdom, or some other weird form of drastically-out-of-whack power structure. Employees often aren't treated as equals, they're not given agency or power, their needs and desires aren't understood, and they aren't inspired by a common cause. So unless an individual takes it upon themselves to suddenly do the best job they can possibly do, they will flounder in their own little world, being largely ignored by management (until they're not meeting some ridiculous arbitrary yearly goals that are mostly designed to cull the completely apathetic) and never having any interaction with executives other than the way a king would give proclamations to the townspeople.

To me, "treating people well" means treating them like people who have a say in what they do and how they do it, by helping them do the things they want to do, by connecting them to their work, giving them pride and purpose, feeling valued and compensated. After that, the rest takes care of itself. But getting to that point is impossible if management treats them like cattle.

twiceaday• 6 years ago

Employee perks and salaries seem much easier to cut than to increase. Given enough time, especially if a business goes through struggles, things end up down hill. But also, I think your implied premise is flawed. The goal is to run a successful company, and unfortunately happy workers don't factor much into the success, not always. Mediocre, unhappy workers are much easier to come by. If you can structure your business to run well on those that might actually be optimal for the bottom line, and that's really all that matters on the stock market.

JustSomeNobody• 6 years ago

Culture. If the people up top Only care about numbers then eventually the people down below will only care about numbers. The people who don’t leave for places that are better.

bsanr24• 6 years ago

Many American companies that are infamous for not being able to do it here manage it in their overseas locations. I pin it on the deficiencies of American culture and some combination of the failures in worker's rights, corporate priorities, and consumer habits that it influences. We know a good thing when we see it, but with our history and our ethos, we just can't seem to help ourselves. The "what" we do wrong is myriad, but I believe this is the why.

lkrubner• 6 years ago

One possible answer is that much of management is driven by irrational forces, to a much greater degree than is predicted by economic theory. Perhaps ego and selfishness are much bigger motivators than generally understood. Such is my take in "How To Destroy A Tech Startup In Three Easy Steps":

https://www.amazon.com/Destroy-Tech-Startup-Easy-Steps/dp/09...

mdorazio2• 6 years ago

Serious question: are they also diligent about firing people who don't pull their weight? The mantra is fantastic, but my experience has been it gets taken advantage of pretty quickly if you don't have a feedback loop to make sure you really did hire good people.

0xTJ• 6 years ago

This is just my personal experience, in Canada, but I've never encountered rude and unhelpful employees at Costco like I have at many other stores.

Pfhreak3• 6 years ago

Yes, though people generally recognized the good thing they had and worked hard to maintain it.

GauntletWizard• 6 years ago

Not at costco corporate, apparently, from the way my mother has described her coworkers.

fmajid• 6 years ago

It helps that they have huge numbers of candidates for every opening, and can afford to be picky about who they hire.

yeowMeng• 6 years ago

On my second day at work they let go of the dozen people who had been our groups training “buddies” the night before. That sends a strong message. In the five subsequent years, I can’t recall anyone else getting let go. I later learned that my cohort was rare in that we were hired directly without doing seasonal employment. Every other group hired after me, they would select their top picks from the seasonal cohorts of 20-30 people. One year they hired no one, one year they hired more than 10.

There were some people I thought were lazy, but many people on my night shift were hard and proud worker.. not like that day shift though!

Reedx• 6 years ago

Costco and Trader Joes seem to consistently have the happiest employees, and it really makes a difference.

Maybe we should have them take a shot at running the DMV, who have the most miserable.

mav3rick4• 6 years ago

They are happy because the company treats them right. Give the DMV people the same rights and perks and you'd see them happy as well.

dboreham2• 6 years ago

Data point: the DMV here in Montata is staffed by happy cheerful helpful employees.

demadog• 6 years ago

Weird! I've found them to be completely opposite. Trader Joe's employees are extremely friendly and helpful.

Costco employees, honestly, not helpful at all and almost always disdainful of being asked any question. I guess that's not their model.

I suppose Costco employees can be happy with the company, but not happy and friendly to the customers, in which case, that holds up.

axaxs• 6 years ago

Absolutely. Same with chick fil a. They run a tight ship, but importantly, they are completely nice, much like Costco employees. And as long lines prove for both, there's an untapped market for this.

bo0tzz• 6 years ago

Unfortunately they do have some questionable morals on other fronts.

dblohm7• 6 years ago

* Unless you’re a professional working at the pharmacy or hearing center. I’ve heard some pretty bad stories about those positions.

RSHEPP• 6 years ago

If you go on reddit pharmacy, you see people say Costco is by far the best retail pharmacy and almost impossible to get a full-time gig with.

exogeny• 6 years ago

This feels very similar yo Chick-Fil-A and In-N-Out and, well, the results are what they are.

EdwardWarren5• 6 years ago

I heard from an In-N-Out employee that store managers make 6 figure salaries and there are two of them in each store.

In-N-Out, Costco, and Chick-fil-a employees all seem to work really hard and are unfailingly good with customers. I had a problem in a Target once, talked to an employee about it and he went to 'check on it' and never came back. Just left me standing there.

arsome3• 6 years ago

A word of warning, I've frequently found Costco meats are far more expensive than at my local grocer, often on the order of 50-100% on sale items.

The design of the stores is also horrific, designed to make you maximize browsing time. Availability of products is piss poor too - one week you might find something you love, the next week you can't get it at all. I cancelled my membership after the first year because the main product I bought it for was no longer readily available.

Don't waste your money. Check your local flyers and cancel the expensive yearly memebership, it's just another way for big businesses to scam you.

3fe9a03ccd14ca53• 6 years ago

I find them to be comparable if not slightly better than other grocery store non-sale prices. Those places have good weekly deals, but their everyday prices are meh, and why visit multiple stores when you can get it all done at once?

solotronics• 6 years ago

For me I find the average quality of stuff they sell at Costco is higher than other places. A nice warm weather resistant jacket was $35 this winter, I would have gotten something similar for $80 at a mall. The food is all good. I can pick something randomly I haven't tried before and I know it will be quality food. Compare this something like Walmart or Amazon where trying something new is like russian roulette.

tw042• 6 years ago

I bought a high sierra "camelbak" type water pack for $25. I actually told someone I got it for a steal at $30 because I forgot what it cost. By the time my girlfriend went back they were gone - same thing at Amazon was over $40.

While I hate that you basically have to make an on-the-spot decision, they absolutely crush it on quality and price 9 times out of 10.

https://www.amazon.com/High-Sierra-Visalia-Hydration-Backpac...

http://www.costcoweekender.com/2016/03/high-sierra-visalia-9...

inferiorhuman10• 6 years ago

I tried out a Costco membership for a few weeks and finally got around to cancelling it last month. In general when I went looking for stuff I'd either find good prices on things I didn't want or average prices on things I did.

For example, coffee. The vast majority of what I saw on the shelf was ground coffee – for personal use bulk whole beans are a better value because they stay fresher longer. Most of it was also Seattle's Best / Starbucks / Peets, not terrible but particularly good either. Kitchen equipment – Costco has great prices on Le Creuset, but only has two sizes listed online (both oval). Laundry detergent, mostly heavily scented stuff, pass.

IMO discoverability is on par with Amazon (not a good thing) which discouraged me from spending more time than necessary in the warehouse.

toasterlovin2• 6 years ago

FWIW, Costco only sells high quality meat. Most of their beef is USDA Choice or Prime.

i_am_nomad• 6 years ago

Costco sells USDA Prime? That’s worth the trip alone. Most grocery stores never have Prime.

bwilsonkey• 6 years ago

This couldn't be more wrong. Costco sells excellent quality meat at great prices.

e.g. Costco sells prime-grade brisket for ~$4/lb. where I live. You generally can't even find prime brisket at an average grocery store, and the choice-grade will routinely run $7/lb or more.

arsome3• 6 years ago

I do compare for the same grades of meat, perhaps it's a US vs Canada difference, but I've found this to consistently be the case.

thewileyone• 6 years ago

With beef, it is more expensive. But that's because the quality is so much better. Get a steak from Costco and one from a chain supermarket, grill them and compare the taste. No comparison, Costco wins.

ranDOMscripts2• 6 years ago

designed to make you maximize browsing time

Have you never been to an IKEA? If you want to see what maximizing browsing time looks like IRL, you should visit one some time.

arsome3• 6 years ago

For Ikea, simply open website, find product, look at aisle number, walk to aisle in warehouse. Done. They also have a consistent selection of products available. If you've done the tour in the past year, chances are you already know the product you're looking for and chances are they'll have it in stock.

Ikea actually minimizes it if you know what you're looking for. Try doing that at Costco where they re-arrange the store just to make you have to look at things you didn't intend on buying. This practice has been the subject of many articles even:

https://www.businessinsider.com/costco-store-layout-how-to-g...

https://www.npr.org/sections/money/2015/09/25/443519599/epis...

mdorazio2• 6 years ago

Ok,

1) Are you comparing equivalent quality meats? It's easy to find crap quality meat near its expiration date for cheaper than Costco deli price. It's pretty hard to find equivalent high quality fresh meat at the same price point without a bunch of coupons or random sales.

2) I'm not sure why you think the store design is horrific. Maybe it's particular to your local Costco, but I've been to at least 15 locations and they're all laid out pretty neutrally with logical aisles and departments. If you know what you want, you can go straight to it as quickly as you can navigate oblivious people pushing their carts at grandma-with-a-walker pace.

3) You're right - items do go in and out of stock because of the whole Costco business model. They arrange for preferential pricing on a contractual basis to get members deals they won't find elsewhere. Sometimes the supplier decides not to renew the contract or Costco decides the shelf space is better used for something else. That's just how it works. If you find a product you like, you can always order it in bulk online when Costco doesn't have it anymore. If you're only going to Costco for one or two items you like, the membership isn't for you.

tonyb• 6 years ago

I own a BBQ business and CostCo in my area often has meat less than my wholesale cost from various restaurant suppliers. I can often get Prime briskets from costco for less than Choice from other suppliers. The same is true for some other items as well (foil pans are cheaper at Costco than restaurant supply store for example)

DanCarvajal• 6 years ago

Every time I walk into my local Costco I whisper to myself "Welcome to Costco, I love you."

koolba2• 6 years ago

When I walk in I usually say something like, “You get started, I’m gonna grab a ‘before’ dog then catch up...”

1123581321• 6 years ago

I’ll admit to having gone in for just a hot dog before.

tyoma• 6 years ago

I’m going to go against the grain here and say I absolutely dread going to Costco but tolerate it because of the prices and bulk availability of certain produce.

A quick ranty list of complaints:

The store is too small for the amount of people and the enormous carts. It is a game of bumper cars every time.

Similarly, more than once I had to give up since the parking lot was completely full and I could only take so circling the lot. The gas lines are reminiscent of the pictures from the ‘73 oil embargo.

The location of items and item selection changes constantly.

There is few staff available to help you find anything.

The free samples attract hangers on like moths to a flame, blocking traffic. People treat the samples as a free lunch for their kids, and let kids ride unsafely ride inside the cart and not in the cart seats — no one stops this.

I have more, but writing this is already getting to me.

aidenn0• 6 years ago

I'm curious why it bothers you where in the cart the parents allow their kids to sit? I can see how all of the other things you list affect you, but not that one.

InvaderFizz• 6 years ago

Sounds like the Costco in Sunnyvale, I absolutely loathed going there. I'm not sure what the other Costcos in Silicon Valley look like, but Sunnyvale is a terrible experience.

Every where else I have been, Costco is great. The store is never packed, even if busy at times. Checkout lines never exceed 5-10 minutes. Gas lines rarely exceed 10 minutes at the busiest of times.

gowld3• 6 years ago

Yeah, no one goes to Costco anymore; it's too crowded.

rndmize• 6 years ago

All of this just sounds like you're going at peak times. My parents tend to go on weekdays in the last half an hour before closing - Thursday is good to have fresh stuff for the weekend. I tend to go Saturday morning at opening - sample stations aren't set up, food court isn't a mess, everything is fast.

amerkhalid• 6 years ago

Yeah I am in the same boat, I dread going to Costco on weekends or before any major holiday. And yes I hate free samples, people horde around free sample stations blocking traffic.

I prefer to go during lunch hour or after work.

intopieces• 6 years ago

I believe that most of your complaints about the experience could be mitigated by timing. My local Costco"Opens" at 9am but the doors are usually open by 8:30. My trick is to make a very fast run on a weekday morning before work (luckily there's one on the way) - have a list, grab what I need, pay and go - and I've found this works wonders for maximizing my time.

jackaroe78• 6 years ago

I like to think that we all do. Bless up

ganoushoreilly• 6 years ago

I got my mba at Costco!

tempsy4• 6 years ago

While I grew up going to Costco many weekends and still go on monthly trips as an adult, I actually think its business faces a lot of risks over the coming decades.

The entire concept is optimized for upper middle class suburban families with cars. Once millennials age into middle age over the coming decades, will they have kids in the same numbers as their parents (data says no) and thus need or want to buy in bulk? Will they live in the suburbs where warehouses are primarily located? Will they have cars to even get there? Will they want to pay for a membership when they already have Amazon or wide availability of other stores that deliver for free?

I'd predict not in the same rate or numbers as boomers or Gen X, and imagine Costco would need to transform several aspects of their current business model if they wanted to stay relevant 10-20 years from now.

duxup6• 6 years ago

"Will they live primarily in the suburbs where warehouses are primarily located?"

Where are they going to live?

cortesoft4• 6 years ago

The city?

tempsy4• 6 years ago

Millennials are increasingly staying in urban areas, not having as many kids (or kids at all), and not moving to the suburbs in the same rate as Boomers did. This is a well documented phenomenon.

https://www.wsj.com/articles/ok-boomer-whos-going-to-buy-you...

AdmiralAsshat2• 6 years ago

The entire concept is optimized for upper middle class suburban families with cars. Once millennials age into middle age over the coming decades, will they have kids in the same numbers as their parents (data says no) and thus need or want to buy in bulk? Will they live primarily in the suburbs where warehouses are primarily located? Will they have cars to even get there? Will they want to pay for a membership when they already have Amazon or wide availability of other stores that deliver for free?

My girlfriend and I are millenials with no children. We still have a Costco membership. Hell, I had a Costco membership before I met her, when I lived alone. I buy all my gas at Costco, and the savings alone from that usually equal or exceed the $60 membership dues by the end of the year, so everything else is pretty much gravy.

tempsy4• 6 years ago

yes, same. That doesn’t refute anything though when it comes to looking at how a massive generational shift will impact their business. It’s not incorrect to say this is a business that whose main target is upper middle class suburban families with cars and that in 10-20 years middle aged millennials will in aggregate likely have fewer reasons to go to Costco in the same rate as our parents for all the reasons mentioned above.

going to Costco as a single millennial is basically a hack, not the target customer at all

inferiorhuman10• 6 years ago

I buy all my gas at Costco, and the savings alone from that usually equal or exceed the $60 membership dues by the end of the year, so everything else is pretty much gravy.

That seems like an optimization for folks with cars…

ra7• 6 years ago

There are tons of things at Costco you can buy for daily consumption that don't come in a 10-pack (bulk), even for millennials with no kids. Ultimately, everyone looks for value and Costco is very good at providing value.

danbolt• 6 years ago

For about six months I lived in Japan in an apartment in the suburbs. I was a homemaker while my partner worked in the city. I would frequently take the train with large bags to Costco and stock up on bulk purchases such as rice, oatmeal, and other items.[1] We live in Vancouver now, and we usually rent a carshare to make a 2-hour trip or carpool with others on our membership.

I don’t think this situation is entirely representative of most other millennials in North America. As a cohort though, we’re likely to be less well-off than boomers, so I think Costco has economic appeal still.

[1] The canteen area had decent North American-style pizza so I could be tempted to make the trip.

trhway• 6 years ago

Hypermarts are a thing in (just outside usually) the dense cities with good public transportation, so Costco is almost (may be need to supersize its stores just a bit more) ready for the future.

bllguo2• 6 years ago

Great car ownership point. I love Costco and I grew up going there, but I don't own a car so going is infeasible. Instead I end up using a mix of local grocery stores and Amazon delivery. OTOH I'm certainly not noticing any widespread trends towards reduced car ownership around me unfortunately, but nevertheless I feel like the landscape will be pretty different in the near future.

edoceo2• 6 years ago

Costco Sunday with the family. The lines are a bit long but the samples are fantastic the deals are good and nearly all the staff a friendly and helpful. This is a well run operation.

RcouF1uZ4gsC2• 6 years ago

The real nice thing about Costco is that when I see something I like, I know that it is of decent quality at a decent price. This saves me from having to do research on my own.

bentcorner• 6 years ago

The downside if there's something you're not sure you're going to like. You risk committing to buying a large amount of something and not liking it.

RcouF1uZ4gsC2• 6 years ago

Costco does have a pretty generous return policy for those cases.

edoceo2• 6 years ago

You can't return food but everything else is just a matter of waiting in line. IMO the only better return policy is Nordstrom.

triangleman2• 6 years ago

You know what was nice? They have my phone number and called me when they announced a peanut butter recall. Well it wasn't that nice to find out I'd been eating potentially poison peanut butter, but it's better than other retailers.

lsiebert• 6 years ago

I recall an NPR story that touched on costco (I think it was a how I built this episode on trampolines, but I'm not certain). When they pick a company to work with, they apparently send people in not just to inspect them for quality, but to help them be more efficient. They apparently do this not to make more money, but just so they can pass the savings on to the consumer.

earenndil• 6 years ago

they apparently do this not to make more money, but just so they can pass the savings on to the consumer

...so that consumers buy more/are more likely to buy, making them more money. Which is kind of the point of the article.

samatman• 6 years ago

As pointed out elsewhere on this page, Costco doesn't even make their profit on volume. Costco's annual profit is approximately equal to their membership fees and always has been.

The relentless focus is on customer satisfaction, nothing more. They want you to come back next year. That's it.

cortesoft4• 6 years ago

I am not a Costco member for a few reasons.

The biggest one is that the parking lots at the nearby ones are CRAZY. Always packed, and even worse on weekends. They are so bad, in fact, that I even avoid the streets NEAR the Costco, because they back up. And I live in Los Angeles, where I expect bad parking and traffic... this is another level.

Also, I am just getting so used to ordering everything online. We get all our household items via amazon subscriptions (toilet paper, paper towels, dish detergent, etc)... so nice not having to ever think about those things and they just show up when we need them. I can't see myself going back to shopping at stores myself for those things.

cold_fact• 6 years ago

that's cool and all. but you don't understand how much the membership pays for itself with just gas alone

Right now my Costco has gas 50c less than any place around me

baddox• 6 years ago

How does that work? From what I’ve heard, gas stations don’t get anywhere near 50 cents of profit per gallon. Even with massive scale and logistics I would be surprised that they can pull that off.

cortesoft4• 6 years ago

Oh man, I would pay more than that to avoid the parking lot. It would take an extra 30 minutes to get gas there.

And in our case, we already have electric cars anyway.

jimbokun• 6 years ago

Like Yogi Berra said, no one goes to Costco anymore. It’s too crowded.

cortesoft4• 6 years ago

I think my comment is being misinterpreted to be reasons why I don't think costco will succeed... I was just commenting the reasons I personally don't shop at Costco, as a counter to the glowing review in the article. There are reasons not mentioned in the article as to why it isn't for everyone.

Balgair• 6 years ago

I worked next to a Costco while going through school. That place was awesome for a poor college student, even with the membership price. Weekend/summer lunch was a $1.50 hotdog, soda, and one of every free sample. More than enough. The liquor was/is top notch and at a bargain too. Great company.

toast0• 6 years ago

FYI: Most of the Costco hit dog stands don't require membership. In at least California, you don't need a membership for liquor either, and if you say you're going in for booze, you can get the samples while you're in there.

If you aren't buying anything else, you might not need a membership.

gesman3• 6 years ago

Costco == Trust.

Trust in quality, Trust is service, Trust in prices.

To the point that when I need to buy quality stuff at good prices and avoid doing lenghty research to filter out scam, fakes and crap (aka: Amazon, Ebay and their little siblings) - Cosco wins.

There is no other business where people come in with an intention to buy $50 worth of stuff and then consistently spending 5-10 times more each and every time.

Fun fact: It took me 10 years to stop calling it "Price club"

mooman219• 6 years ago

This really. I hate searching for a product on Amazon. I usually get like 3-5 of the exact same item from different sellers under different names and it just feels scummy. I'll go to Amazon if there's a specific product I already have in mind, but otherwise I'll shop on Target's website.

mav3rick4• 6 years ago

Recently bought a high end TV from Costco even though it was 100 dollars more. I just trust that Costco will do right by me if anything goes south.

SomewhatLikely• 6 years ago

I don't know about televisions, but on many items they negotiate longer warranties with the manufacturer. That itself can be worth a lot. For instance I know if you buy a refrigerator on their branded credit card from them you get something like 3 years parts and labor, which is often 3 times longer than the warranty from other places.

gesman3• 6 years ago

That said - it's hard to beat BHPhoto - another trusted brand for electronics and photography specifically.

segmondy• 6 years ago

Even better when you have their card. I bought my TV through them and using their card. The additional warranty gives me a total of 5 years.

chairmanwow1• 6 years ago

I think there is a lot of room in ecommerce for a "trusted brand" like costco where you can just thoughtlessly buy from because I trust they did the research.

Amazon used to be that around 2013/14, but now I prefer to spend more and buy things elsewhere because I don't have to do so much research to make sure the product doesn't suck.

TeMPOraL4• 6 years ago

I wouldn't even mind an affiliate-funded intermediary that just listed the top #5 things from WireCutter for a given category, + some picks from Consumer Reports.

(As long as they didn't link to Amazon, it's not safe to buy there.)

socalnate1• 6 years ago

Ironically, brandless tried to be this for lower dollar items. But there is another story on HN right this second about brandless failing and shutting down.

skrebbel• 6 years ago

There is no other business where people come in with an intention to buy $50 worth of stuff and then consistently spending 5-10 times more each and every time.

IKEA

Paperweight• 6 years ago

I looked at Costco's financials a few years ago and their total annual profit is (was?) approximately equal to their total annual income from membership fees.

zhoujianfu• 6 years ago

I believe that's on purpose... they charge like 3% more than cost, which covers all their operating expenses, and then the membership fees are their annual profit.

rafiki6• 6 years ago

That is their whole business model. Their growth is entirely predicated on more members joining/renewing this year than they had in total in previous year.

And frankly, it's absolutely worth it. You pay for something like Prime, and before they expanded it to include Video and Music, you were essentially paying for slightly faster delivery and less things to purchase upfront.

Costco's model is all about giving you access to the best VALUE. They do really sell very very close to wholesale prices and many things are sold at cost.

Will they ever be the size of Amazon or Walmart in revenues? Probably not. That's not their goal. By having a membership, they are mostly targeting a demographic with something above $0 spending money.

Costco is all about slow and sustainable growth, although who knows. Their target market is quickly dwindling so they will eventually need tor raise membership fees to increase revenue and profit.

davidmckenna• 6 years ago

Related tweetstorm I came across: https://twitter.com/investing_city/status/117997425777998233...

sunstone• 6 years ago

It's interesting how few people understand (this author included) about Costco is how its huge quantities of consumer consumables (eg toilet paper etc) allows Costco to avoid channel conflict in this segment, which in turn drives traffic into their stores. To my mind this is the key retail innovation that separates Costco from the rest.

enjoiful• 6 years ago

Can you explain this concept more? Sounds interesting.

gowld3• 6 years ago

https://en.wikipedia.org/wiki/Channel_conflict

sergiotapia2• 6 years ago

Hit the nail on the head.

1. Low variety of items

2. Quality items

3. Low price items

4. Extremely beneficial return policy

I tried em all, Costco, BJ's, Sam's Club, Aldi, Walmart, Target. Nobody can tell me how it is, I've actually tried it and Costco is by far the best place for my family to shop. Want a raincoat? Oh yeah rainy season they had a North Face beautiful blue jacket for $80.

I will say their bedroom sets are shit. Buy their cheap sets if you must, their premiums are terrible.

eru3• 6 years ago

Interesting. Could you expand on how they compare to Aldi?

sergiotapia2• 6 years ago

With Aldi, you buy less so you end up throwing out less food. If you're few people, buy from Aldi. However, the quality in their randoms or out-of-the-box foods are noticeably worse.

Bought some Aldi sushi and got sick to my stomach, just nasty cheap salmon cuts, with nasty cheap rice. Mealy and tasteless.

With Costco it's quality all the way, 4 years literally never bought something of poor quality there.

AlexITC• 6 years ago

As others mention, I also have the trust that I can pick anything and it will have decent quality, even on certain items that are cheaper on different stores, it's simpler to get them at costco because I know I can return them very easily if I need to (even without purchase ticket or without box).

Besides that, I like what I have heard from employees, they are very happy, the salary is far higher for the same role than on different stores, and I have heard that jobs are costco are very useful for students because they help you to find an schedule that doesn't conflict with your school.

While people claim that costco has cheaper prices that other stores, that's not 100% true on Mexico, I can get several items for a smaller price (most of them aren't that cheaper) but costco gives me confidence on the details I posted above.

I would love to see more stores following its good practices.

anonsivalley652• 6 years ago

A better example than Costco would be WinCo, which is employee-owned. It doesn't have the same Paradox of Choice exploitation of one item like a Soviet supermarket, it has several choices. And bulk bins. And they don't accept any credit cards to save on processing fees, whereas Costco was AmEx only and now has Visa only.

More generally, workers take care of something as if it were their own when they have an equity stake in it because it is (partly) their own. Just being treated well isn't enough of an incentive to go the extra mile when they have no connection to the profits, only laid-off when the business declines. It seems foolish to be content to accept benefits that most every other industrialized country on the planet already guarantees as a basic right. I think an uncomfortable truth is Americans don't know how bad they have it, and shouldn't sit back while corporate investors amass trillions on their backs, no matter how well or badly they are treated. They are being cheated only because of their failure to get organized and push-back together in some fashion and failure to demand UBI by taxing corporate profits made off automation, longer hours and productivity increases. At some point, if reasonable assistance isn't offered to those who's survival seems threatened (marginal propensity consume is 1.0) and have nothing left to lose, there will be more mass shootings, homeless encampments will expand, more internal migration, less average purchasing power, and more people flamewar-ing in Youtube comments.

kccqzy2• 6 years ago

I've only shopped at WinCo once, in Utah. It was a sad affair. The store was messy. Employees didn't look happy. Many shelves were empty. Forklifts were left in the middle of the aisle, with goods partially unloaded. The lack of credit card payment reduced the peace of mind of a safe transaction. Just no.

atomi• 6 years ago

My WinCo in Southern California is impeccable. I think how well kept the store is has a lot to do with who the people running the store are - especially management, I would imagine.

wwweston• 6 years ago

I think there's a handful of WinCo locations in Utah, so I don't know if the one I've been to many times is indicative, but it's been decent, maybe not quite as good as some California locations (best: Folsom), but maybe not quite as bad as some California locations (Pomona, lookin' at you, but I still love you).

pc862• 6 years ago

The lack of credit card payment reduced the peace of mind of a safe transaction.

This makes no sense whatsoever.

downerending• 6 years ago

I shop at both, and I think what you're observing is primarily that WinCo has much leaner margins. It's a place where the poor and stingiest shop, whereas Costco is really aimed at the upper-middle class. If you're market is the wealthy, then yes, you can afford to make your store a much nicer place.

3fe9a03ccd14ca53• 6 years ago

It doesn't have the same Paradox of Choice exploitation of one item like a Soviet supermarket

Honestly I love this about Costco (and especially Trader Joe’s).

I want them to do a little research and taste testing and stock the item that they think is the best quality and value. I don’t want to crapshoot between 6 different brands of spaghetti.

Trader Joe’s also does a great job at this. It may not always be objectively the “best” item, but it’s usually good and they’ve built up trust with me that gets me to try new and potentially expensive food items.

Cerium• 6 years ago

Costco's largest value add is their curated selection. They never stock the best nor the worst. Shopping is relaxing because you know you won't be screwed, and you only have to answer one question: "Do I want this type of product?", you don't have to answer "Yes, which one of the 5 or 10 available?"

say_it_as_it_is• 6 years ago

Pointing out the obvious on Hacker News isn't going to change America. Go ahead and put your energies into organizing. Convince people with skills you don't have to follow your lead on this amazing, incredible opportunity you envision. If only we just knew what you do, and how bad we have it, it would surely succeed.

koobz• 6 years ago

If you do Costco, and you surf, then you have inevitably come across the "Wavestorm" surfboard.

The original article brings up the trust consumers place in the products Costco decides to sell, and the Wavestorm is a fun example of one such Costco cult.

https://www.newyorker.com/sports/sporting-scene/the-cult-of-...

I hear their Vodka is really great too.

clSTophEjUdRanu• 6 years ago

I'm in NH and I'm pissed my Costco can't carry liquor. Otherwise they're great.

fanatic2pope• 6 years ago

That wavestorm pearl clutching is hilarious. How dare people do things "for fun" and without getting approval first!

dahdum• 6 years ago

I question the placement of Whole Foods as more ethical. I don’t see shelves of high priced homeopathic “cures” and pseudoscience literature at Costco. Whole Foods is all too eager to prey on ignorance and fear.

neilwilson• 6 years ago

It’s interesting that the Costco model doesn’t seem to work in the UK. Here the competition amongst the supermarkets is so intense that Costco can’t sell stuff cheap enough.

The UK Costco’s are a poor imitation of the ones I enjoyed in Canada. Even thought the layout and the idea are the same.

Not sure why tbh.

JonoBB• 6 years ago

Can you explain what you mean by "doesn't seem to work"?

I regularly go to Costco here in the UK. It's almost always busy, checkout queues are long (but move quickly).

tom_• 6 years ago

I assume it's just that you often can find stuff cheaper - if you happen to find a good half price/2-for-3/etc. deal on branded stuff at a supermarket then Costco will be more expensive. The quality of their own brand stuff is good, though, and the prices are reliably at least fair and usually better.

Their petrol station used to be reliably cheaper than everywhere else near me, but they changed supplier and now it's the same price as Tesco. So I go to Tesco, as it's 99 RON and I get clubcard points.

tonyedgecombe• 6 years ago

Aldi has a somewhat similar model in the UK, no subscription but it has a reduced range compared to traditional supermarkets, high quality goods and well paid staff.

flyinghamster• 6 years ago

That's pretty typical of Aldi worldwide, as they operate in the US in the same manner (US Aldi stores are Aldi Süd, Trader Joe's is Aldi Nord).

For me (single) Aldi is a better deal. Costco-sized packages of food are just too much when you aren't raising a family, and I can't justify the membership fee.

triangleman2• 6 years ago

I know it's against the guidelines, but has no one here read the article? Everyone's talking about what they like/dislike about Costco but nothing about 'Costco Capitalism' as described. It's almost a confirmation of what the author was saying--"consumers only are pressured to act as ethical as their value-maximizing formulas allow them to be."

Vinnl• 6 years ago

Yeah, the most interesting part of the article for me was the end: the discussion on the best strategy for increasing the amount of ethical consumption that is going on. It took a while to get to that point, but I'm sure there's lots of interesting things Hacker News could say about that.

My personal strategy so far has been to encourage some ethical consumerism by example, not because that directly increases the share of ethical consumption significantly, but because I think that attaching ethical considerations to an action as common as consumption will, down the line, also encourage people to vote in line with that. In the end, it currently seems to me like regulation is a required part of upping our collective standards and impact.

bllguo2• 6 years ago

the concept is simple, really. make sure incentives are aligned at every step of the business model and for all stakeholders. that's really the spirit of capitalism anyhow.

epicgiga• 6 years ago

I kind of want to shop at Costco now.

Yet another example of how just being a good company gets you free advertising.

I basically just consumed a 10 minute ad, and enjoyed it, and now want to go buy a pallet of something from people who I now assume will cheerfully applaud my gluttonous purchase.

bryanlehrer2• 6 years ago

It’s not all positive

mothsonasloth• 6 years ago

Costco came to the UK in the 90's, I remember when it opened in Glasgow in 1994. My parents were some of the first members there and I was so proud when I got my own membership at 18.

Their Kirkland brand is always good quality and has never let me down unlike other homestore brands.

As a Brit another thing that makes it appealing, is for us, it seems like the "American" shopping experience.

Going to Costco is like an adventure trip/excursion. Compared to ASDA, Waitrose or going into the city to shop.

somesortofsystm• 6 years ago

>>"While some of my city dwelling friends in their twenties might find it amusing to shop at Costco"

I live out on the rural outskirts of a central European city, into which I regularly commute for work and life.

I'm often very amused at the city-dweller point of view. These are people who live surrounded, in geographically aligned order, by about 1,000 other people, on average, within a block. They're stacked on top of each other, a literal hive. Public transportation is superlative, but the city was made for horses, something that hasn't changed much.

The effort required to walk down the block to a Billa or Aldi is often far, far too great for these denizens. Actually, as a whole, city-slickers require far too much motivation to escape the zone of their immediate comfort level. It gets so cozy.

Out in the sticks, nothing at all is thought of a 20 minute walk to pick up a jar of honey, a bottle of milk or a bale of apples. Alas, city-slickers take so much prodding to get out of their city these days.

But, in the sticks, we do have a Costco equivalent. I can honestly say that I use it quite a bit to keep the house stocked with necessities. I often see business-owners from the city shopping there, though .. ;)

lawlorino• 6 years ago

Why do all the top comments in this thread read like Costco adverts with no discussion of the actual article content?

deadbunny2• 6 years ago

Satisfied customers spread their good tales. Who would have thought?

Dirlewanger• 6 years ago

Because even on HN, no one reads the articles.

bryanlehrer2• 6 years ago

I’ve read through 200 comments and yet I’m not sure if anyone actually read the piece

bradlys• 6 years ago

I read it but didn't read it extremely thoroughly (it is long and feels like it kinda sits too long on points).

Do you think Costco will rise in popularity any further? It looks like it's at a maximum of ethicalness to profitability in terms of food goods. (It offers bottom barrel ethics on clothes as far as I've seen) Do you think if the economy tanks then costco will just immediately switch to less ethical options because consumers will not be able to afford all their more ethical options? Did anyone study what they did during the recession?

I feel like a lot of their more ethical food options are more recent in invention... Mainly following upper class trends. A lot of the things there seem like they're trying their best to imitate what the upper class has. It's rare to see a high end good by itself at a good price. They offer thermoflasks instead of hydroflasks. Only one or two Le Creuset pots but they're really high priced still. Kirkland versions of kitchenware instead of the cuisinart ones that are just knockoffs of the all-clads everyone wants.

Personally - Costco feels like a slight improvement over Walmart but only at certain goods. It feels far lower than Whole Foods when it comes to ethical choices. I think that ethical gap is far greater than the image you posted gives off.

As far as price goes - I think Costco only feels like a good value to consumers who aren't savvy at shopping. For me - an overly savvy shopper - I feel like I'm getting ripped off when I go there as I buy most goods for less or equal to what they offer.

Dowwie• 6 years ago

Back in Summer of 2009, I planned a camping trip for Yosemite. I flew into San Francisco, bought supplies at Costco, and drove east until Yosemite. I won't forget the SF Costco. Adults were riding the back of their carts as children do in grocery stores. They were happy. Very happy. I just assumed that this was SF behavior and didn't think much more about it. Yet, in hindsight, the cost of living is the highest in the country. People are struggling. Costco offers refuge from that struggle. Ride on, costcoers!

codingmess• 6 years ago

So they simply found a way to operate more efficiently, allowing them to pay their workers more (as they earn more per worker). Why does that need to be framed as "fair"? According to the article, they can afford to pay their warehouse workers more, because they need fewer of them. is that "fair" or "unfair"? How do the people who need a job but don't get a job at Costco because they are not needed anymore feel about it?

Also, shoppers beware. I don't know Costco, but here in Germany there is also a company that is famous for its good prices, Aldi.

Legend has it that they deliberately used wooden shelves in their stores because they looked cheaper, even though actually metal shelves would have been cheaper. Was reminded of that story when I read in the article that at Costco you shop off shipping pallets.

Also Aldi is being criticized for using its market power to demand low prices from suppliers. How does Costco fare in that regard? (I personally don't share the criticism, but I suspect people who are in the business of worrying about "fairness" would).

davidgrenier• 6 years ago

The day I learn Costco treats its employees the way Amazon does, I will find an alternatives just like I did with Amazon.

yufeng66• 6 years ago

Costco capitalism can be summarized as hire top 5% of the population and the rest can take care of itself. However, not all worker are in the top 5% and they need jobs as well. Hence Walmart capitalism

Costco Capitalism

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