How do they afford to do this?
After months of talking and contemplation, I’ve finally bitten the bullet. I’ve been convinced. I’ve joined the club. The Costco membership-only discount wholesale club.
Dave and I decided to both join and split a membership (since you get a second free “household” card). This just meant that he had to “have recently moved in with me” and tell them my address, and we were good to go. Cost to each of us $25.
Yesterday, Dave and I made a quick trip to check out the deals. I had high expectations. And they were so, so, SO exceeded. Selections was great, prices were even better than I expected, and, surprisingly, the quality of products was very very good (name brand items, gourmet items, and the house brand is good). Some examples:
- Land O’ Lakes Cocoa. Can buy packets individually in Target for $1/ea. Can buy a 36-pack at various places on the web for $22, or $0.61/ea. At Costco, I got the 36-pack for $9.89, or $0.27/ea. That’s 73% off what I usually buy it for at the store.
- V8 Fusion. Typically find this at a gas station for $1.75 or so. I got a 12-pack for $10.99, or $0.91/ea.
- Pizza. Fresh, store-made pizza. It’s huge, probably 16 inches. And loaded with toppings. $10. I’d say it’s probably the size of a family-size from Papa Murphy’s, which is $14 and is a great deal then.
- Oral-B Advantage Toothbrush. Walgreens carries these for $3.49/ea. You can sometimes find a 2-pack at Target for $6. I got a 10-pack for $11.99, or $1.19/ea. A 66% savings.
- Gift cards. They have a wide assortment of gift cards for less-than-face value. For example, a McCormick & Schmick’s restuarant gift card pack, with $100 gift card, plus cookbook for $79.99. Seriously, gift cards for less than face value?
Now, admittedly, not everything is a great deal. Pasta is about the same price as in the grocery store, $1.10/box for Barilla (can find this on sale for that often). But still, nothing is more expensive then you’d find it in a regular grocery store. And everything is cheaper than a high-end store such as Lund’s.
The only down-side? The bulk. Everything is in a bigger bottle and a larger pack. But, most of it is frozen or non-perishable. So as long as you have a big pantry or room to store boxes of stuff, then why not?
How do they make money on this? Well, they sure do make money. The have a market cap of $22 billion, about the same as Target. They executives all make 7 figures. Their CEO makes $3.1 million. Yes, they make money? How? They bring you in for the great deals (such as eggs, meat, gatorade, things like that), and while you’re there, you buy pasta and other things too. You’re still getting an OK deal on those items (pasta, etc., just as good or better than the store), but they are still making their margin. Plus, you’re buying it in bulk, so they’re making even more off it it. It’s a good strategy for them, and you still come out ahead.
Regardless, I’m in love. Dave and I are taking the entire Douglas house back this weekend for a trip to do some serious shopping, without time constraints. And it will be amazing.