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Costco's Key Success Factors

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First, in the US employee satisfaction survey, Costco surpassed Apple, Facebook and inter, second only to the number one Google. The employee satisfaction of retail companies is very difficult to fight, and Costco's employees are more than many top companies in Silicon Valley. According to the survey, a cashier at Costco earned an hourly wage of $20.89. This is almost twice the size of competitor Walmart, so the treatment of such employees enables employees to be more active in their work. While enhancing the corporate image, it can also bring a better shopping experience to customers (Brian Woolf, 2015).

Most importantly, in today's global economic downturn, companies around the world are pursuing profits, and few companies make profits for customers. Only Costco wants to make a little less money to give benefits to customers. For example, Costco's profits are so low that people can't imagine, on average, at 10%. For example, a bag of potato chips is purchased in US dollars, they only sell for 1.1 dollars, and Walmart will sell for about 3 dollars. Costco's low profit, after removing shipping and taxes, has almost no profit. It can be seen that Costco does not make money by selling things. This is not because of the low profits caused by fierce competition, but to actively reduce profits to a level that does not make money at all. Not only have that, but Costco’s returned service is unimaginable. For example, if we buy goods at metro or shoppers, we may get a refund period of less than 15 days. And Costco has done it no matter how long, regardless of the reason, customers can return, even eat and use electrical appliances at any time. Long-term customer benefits and excellent service have made it a great success in the competition of global retail companies.

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Costco has achieved worldwide success with its unique membership philosophy. Costco membership fees are divided into two types of 55 or 110 US dollars/year. With nearly a million members worldwide, Costco earns billions of dollars a year in revenue. And excellent service has made Costco gain amazing customer loyalty. On average, nine out of ten members will continue to choose Costco in the second year. Although Costco can't survive the fiercely competitive retail industry in terms of current economic development and social structure, he stands out from the global competition with its unique membership and low profit and the strange patterns listed above. Many supermarkets and e-commerce have used it as a benchmark, but it is difficult to imitate. Costco is ostensibly a successful supermarket and a successful intermediary. For a general company, the source of profit is the difference between the purchase price and the retail price of the goods sold. For example, Walmart suppresses the purchase price of goods by a large amount of purchases and then sells them. The term intermediary is not directly providing the corresponding service or item but it can find and arrange for the customer to choose and decide. Costco will work with local car dealers to sell cars, and there is a central car dealership center that builds a network. Then these local dealers have some price agreements with Costco, and they can go directly to the dealer stores where Costco is working to buy a car.

Costco's suppliers are maintained at around 4,000 of Walmart's, and there are only one or two options for each segment. But these 4,000 suppliers are brands that already have good reputation and customer trust. In this way, Costco reduces the customer's choice time and also provides customers with the best quality and most cost-effective products. Members will not be worried about buying fakes and quality safety issues. There is a strict specification for the supplier Costco, and if there is a problem with the supplier's product, Costco will not cooperate with it for at least three years. If the partner gives other companies a lower price, the supplier's merchandise will never be considered by Costco. The control of the supplier can control the procurement cost on the one hand and increase the inventory turnover rate of the commodity on the other hand. According to the survey, Costco's inventory turnaround time is about 31 days, while Amazon and Walmart are about 45 days. This short turnaround time gave Costco a good cash flow, which also reflected Costco's philosophy of business philosophy.

Guaranteeing the quality of the goods, safeguarding the members' rights and enhancing the loyalty of the members made Costco a successful company. Focusing on long-term benefits rather than on short-term profitability, Costco has grown rapidly in just a few decades. A successful company cannot do without innovation and development. With the development of e-commerce, Costco also has its own online store to allow members to have more shopping channels.

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Costco’s Key Success Factors. (2022, September 01). Edubirdie. Retrieved November 29, 2023, from
“Costco’s Key Success Factors.” Edubirdie, 01 Sept. 2022,
Costco’s Key Success Factors. [online]. Available at: <> [Accessed 29 Nov. 2023].
Costco’s Key Success Factors [Internet]. Edubirdie. 2022 Sept 01 [cited 2023 Nov 29]. Available from:
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