Why are people willing to pay an annual $55 fee to become a member just to shop at Costco? The exclusive membership card, a sustainable point of difference for the company, offers deals and coupons for regular members and a 2% reward for executive members on most purchases.
People choose Costco, the leading wholesaler in high-quality products, over other shopping centres for its unbeatable price. Costco’s financial report shows its gross margins, at 12%, are lower than Wal-Mart’s 24%. Costco and its own store brand, Kirkland Signature, “doesn’t strive for parity, it demands superiority.” If the right product hasn’t been created yet or an existing one can be improved, Costco creates its own from scratch, exploring new techniques and technology. It is then able to bring the new product to the market for a better price than other comparable products.
Costco offers discounts and benefits for members while providing high-quality products; the member fee is only a fraction of the savings one gets from shopping at Costco.