Costco is a familiar name in the U.S. retail industry.

You can find Costco stores in and around many

major cities in the U.S.—as well as a number of other countries—but Costco is no ordinary store.
When people shop at Costco, they will have a very different experience. A Costco store is a huge
warehouse and to shop at Costco you must be a member and show your membership card before
you can enter.

We call Costco a membership-warehouse club and since it opened its first warehouse in Seattle in
1983, it has become the biggest membership warehouse club in the U.S. and the third biggest
retailer in the world. Costco has over 650 warehouses in 9 different countries, although the majority
of warehouses are in the U.S. Costco headquarters are in Issaquah, just outside of Seattle.

Costco has a simple business model: reduce overhead costs and sell quality goods at cheaper
prices to consumers. Most Costco warehouses are located just outside the city limits where real
estate prices are cheaper. Costco also saves money by buying in large volumes directly from
manufacturers instead of distributors. By buying in volume, it can get a discount, which it passes on
in lower prices to consumers. Products are shipped to the warehouses and directly placed on the
floor of the warehouse. Many products at Costco are sold in big sizes, especially everyday
household items. Costco does not spend a lot of money on creating displays, making the stores

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attractive or marketing, again saving money. Finally, people also have to pay an annual membership
fee, so it can sell products at close to break-even.

Compared to other superstores there are actually fewer products in a Costco warehouse. Costco
chooses only certain products to sell at a time. (A product may be available one week and gone the
next.) This again helps reduce the amount Costco has to spend on storage and tracking how much
of a product they have left. Costco also has started carrying its own brand of products, usually
significantly cheaper than equivalent name-brand products.

Costco has expanded into online shopping, insurance, car sales and travel and the company
continues to grow. For Financial Year 2015 Costco reported total sales of over $100 billion.

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UNIVERSITY of WASHINGTON