Costcp vs Sams Club
“Warehouse Club Wars”
Costco vs Sams Club
Table of Contents
Introduction ……………………………………………………………………………………….3
Warehouse Business Model……………………………………...…………………………....3
Costco Background ……………………………………………………………………….……..5
Sam’s Club Background ……………………………………………………………….………..6
Competition and Market Position of Rivals ……………………..…………………….………..7
Comparision across Functional areas ………………………………………………….………..9
What is Cross docking ?……………………………………….………………………..13
What is Vendor Managed Inventory? ……………………………………….….……..14
Vertical Integration and Alternative Sales Channels………………….…………..………..17
Conclusion……………………………………………………………………………………….17
Appendix A – Savings for Members …………………………………………………………...19
Appendix B – Port’s Fiver forces (Wraehouse Clubs) ………………………………….…20
Appendix C – Warehouses popular with higher Income families …..………………………..21
Appendix D – Costco derives Value from paying its employees more ……………….….22
Appendix E – Costco and Sam’s Clubs Websites ………………………….……………….23
Appendix F – References …………………………………………………………………..….24
Introduction
The membership warehouse concept was pioneered by Sol Price, who opened the first Price Club in a converted airplane hangar on Morena Boulevard in San Diego in 1976. Sol Price’s Price Club emerged as the unchallenged leader in member warehouse retailing, with stores operating primarily on the West Coast. Although he originally conceived Price Club as a place where small local businesses could obtain needed merchandise at economical prices, Sol Price soon concluded that his fledgling operation could achieve far greater sales volumes and gain buying clout with suppliers by also granting membership to individuals—a conclusion that launched the deep discount warehouse club industry on a steep growth curve.
Price Club was eventually merged with Costco in 1984. The same year, Walmart adopted the Warehouse Club concept and launched its first Sam’s Club stores.
The Club warehouses typically have
Costco vs Sams Club
Table of Contents
Introduction ……………………………………………………………………………………….3
Warehouse Business Model……………………………………...…………………………....3
Costco Background ……………………………………………………………………….……..5
Sam’s Club Background ……………………………………………………………….………..6
Competition and Market Position of Rivals ……………………..…………………….………..7
Comparision across Functional areas ………………………………………………….………..9
What is Cross docking ?……………………………………….………………………..13
What is Vendor Managed Inventory? ……………………………………….….……..14
Vertical Integration and Alternative Sales Channels………………….…………..………..17
Conclusion……………………………………………………………………………………….17
Appendix A – Savings for Members …………………………………………………………...19
Appendix B – Port’s Fiver forces (Wraehouse Clubs) ………………………………….…20
Appendix C – Warehouses popular with higher Income families …..………………………..21
Appendix D – Costco derives Value from paying its employees more ……………….….22
Appendix E – Costco and Sam’s Clubs Websites ………………………….……………….23
Appendix F – References …………………………………………………………………..….24
Introduction
The membership warehouse concept was pioneered by Sol Price, who opened the first Price Club in a converted airplane hangar on Morena Boulevard in San Diego in 1976. Sol Price’s Price Club emerged as the unchallenged leader in member warehouse retailing, with stores operating primarily on the West Coast. Although he originally conceived Price Club as a place where small local businesses could obtain needed merchandise at economical prices, Sol Price soon concluded that his fledgling operation could achieve far greater sales volumes and gain buying clout with suppliers by also granting membership to individuals—a conclusion that launched the deep discount warehouse club industry on a steep growth curve.
Price Club was eventually merged with Costco in 1984. The same year, Walmart adopted the Warehouse Club concept and launched its first Sam’s Club stores.
The Club warehouses typically have
References: WAL MART STORES INC (Form 10-K)." WAL MART STORES INC (Form 10-K, Received 03-27-2012) COSTCO WHOLESALE CORP -NEW (Form 10-K, Received 10-14-2011) Costco Deploys EnFlexÂ’s EWebConnect for Enterprise Facility Information Management - EnergyVortex." Costco Deploys EnFlexÂ’s EWebConnect for Enterprise Facility Information Management. N.p., n.d. Web. 15 Oct. 2012. <http://www.energyvortex.com/pages/headlinedetails.cfm?id=1003>. Standard&Poor(S&P) Report on Costco and Walmart Corporation. Reuter’s Report on Costco and Walmart Corporation "Distribution: Channels and Logistics." Distribution: Channels and Logistics. N.p., n.d. Web. 15 Oct. 2012. <http://www.consumerpsychologist.com/intro_Distribution.html>. Consumer Reports - Costco and Sam 's Club. Received 10-27-2011