Costco Wholesale Corporation (costco) Case
Costco Wholesale Corporation (Costco) is a membership warehouses which provides a wide selection and rock bottom prices on quality brand-name merchandise to their members. Costco segmentizes its business into 6 merchandises, namely fresh food, hardlines, softlines, sundries, food, and ancillary and others. Owning 635 stores worldwide with workforce exceeding 150,000 persons, Costco is no doubt one of the giant retailers in the industry, and the largest membership warehouse club chain in the United States.
In 1983, Jim Sinegal, who founded Costco, opened its flagship warehouse in Seattle, since then the company revenue has been skyrocketing from zero to $3 billion in barely less than a decade. The smashing success of Costco relies heavily on its volume sales strategy. Costco offers supreme values to its customer by maintaining high product quality while offering best prices in the market. Coupled with its unique membership system, Costco instils sense of belongings for his loyal customers.
Procurement
Costco uses vendor managed inventory which greatly minimizes the leverage on labour. The system developed, ConnectionHub, provides Costco a single point of integration to manage all supplier listings effectively.
Costco is creative when it comes to select correct products to be sold. Costco focus limited quality products and purchases them in bulk in order to achieve economies of scale. The products are made available in warehouse and ready to be sold to its customer.
In addition, Costco purchases an item early in its life cycle while the cost is low, and sells it before that cycle hits a peak. Costco’s long-term foresight in market demands ensures its leading role in targeted segments.