They actually don’t buy all the products they sell.
They often only pay the manufacturers after its sold. And sometimes don’t return the units which don’t sell
They often only pay the manufacturers after its sold. And sometimes don’t return the units which don’t sell
This is not true at all. Costco buys everything they sell.
> They often only pay the manufacturers after its sold.
This is true, and may be where your confusion lies. They buy on net 30/60/90 terms from their vendors. This means they have 30/60/90 days to pay them. Because they move inventory so quickly, they have often sold an item before they have to pay for it.
But they are still buying it and still taking the risk that it won't sell.
> And sometimes don’t return the units which don’t sell
This is only true because as I said before, they own the items.
My source (which I understand may not be satisfactory) comes from working at two of the biggest US retailers for a total of almost 9 years.
The model isn't common for general consumer goods retail, but it's a fairly common practice once you get into more specialty and high-priced inventory.
[1] https://www.warehouseanywhere.com/resources/consignment-inve...
I don't know about Costco, but the big box stores don't carry any risk. If the product doesn't sell then they return it and deduct that off your next invoice. The same happens for a customer return.
Depending on the retailer/product category you might get charged slotting fees, pay-to-stay, plus a share of promotional costs[1]. There are also other fees for use of distribution centers, discounts for paying early (even if it's not early), fees (or extended terms) for slow-moving products, and so on.
"Owning the items" feel less correct than "borrowing items with a promise to pay".
[1] https://traxretail.com/blog/quick-guide-shelf-space-costs/
That clearly does not apply in many instances, otherwise we wouldn't have clearance sections. There are all kinds of scenarios where it's either not possible, not feasible, or just not economically viable to return products to the manufacturer.
I'm not making this up. There is an entire cottage industry of "product rotators" who work on behalf of suppliers to go into stores and "rotate" the product that's closest to expiration to the front of the shelf, because the supplier has to pay the retailer for any product that expires before its sold.