Costco
A company that has its own unique business model unlike most other retail shops, Costco is an exclusive membership warehouse club that strives to offer members the best prices and a variety of superior quality products. The first Costco warehouse was opened in 1983 in Seattle and has rapidly expanded worldwide over the span of two decades, with hundreds of outlets internationally in Mexico, Canda, Asia, Australia and the United Kingdom (Costco Wholesale 2014).
The average Costco customer is found to be a college graduate earning an estimated $100,000 a year, twice the national average. This shows that their customers are ones who can afford the yearly membership fee and to spend as they please in the warehouse as most customers find that they tend to overspend as they shop about Costco. Costco is able to create value for its customers by creating a sense of adventure and mystery for the customer who relates a shopping experience at Costco as akin to a “treasure hunt”. Another value is the low prices of items that customers can buy at no more than 15 percent mark ups as compared to departmental stores that mark up merchadise by 50 percent and supermarkets that mark up their items by 25 percent or more (Lutz 2013). At times, Costco has special deals for customers by selling branded goods like Prada handbags, Cartier watches, Kristie Kelly wedding gowns, barrels of whiskey or even engagment rings, all at specially discounted prices (Luling 2014).
The first area of Costco’s value-chain analysis will be the primary activities of inbound logistics and marketing and sales. Costco is extremely proficient and efficient in their procurement system, integrating a mix of human and technical skills and capabilities. One such instance is the development of a competent technique of delivering inbound cargo to their designated warehouses within the span of less than a day to ensure there is no time and cost wastage of leaving the items in the delivery trucks (Costco
The average Costco customer is found to be a college graduate earning an estimated $100,000 a year, twice the national average. This shows that their customers are ones who can afford the yearly membership fee and to spend as they please in the warehouse as most customers find that they tend to overspend as they shop about Costco. Costco is able to create value for its customers by creating a sense of adventure and mystery for the customer who relates a shopping experience at Costco as akin to a “treasure hunt”. Another value is the low prices of items that customers can buy at no more than 15 percent mark ups as compared to departmental stores that mark up merchadise by 50 percent and supermarkets that mark up their items by 25 percent or more (Lutz 2013). At times, Costco has special deals for customers by selling branded goods like Prada handbags, Cartier watches, Kristie Kelly wedding gowns, barrels of whiskey or even engagment rings, all at specially discounted prices (Luling 2014).
The first area of Costco’s value-chain analysis will be the primary activities of inbound logistics and marketing and sales. Costco is extremely proficient and efficient in their procurement system, integrating a mix of human and technical skills and capabilities. One such instance is the development of a competent technique of delivering inbound cargo to their designated warehouses within the span of less than a day to ensure there is no time and cost wastage of leaving the items in the delivery trucks (Costco