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Comment by ozuly | Hacker News Reader

I'm continuously impressed by Costco. Not only is it one of my favorite places to shop, but I also recently recent to the Acquired episode on Costco[0] and was super impressed by how they run their business. They've continuously been able to align their unique advantages to reenforce each other and make their advantages even stronger. I highly recommend this episode to everyone.

[0] https://www.acquired.fm/episodes/costco

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And they are starting their own ad network.

https://todaysecommerce.com/2024/06/costco-is-working-on-ad-...

The beauty of competent management from the very top down. They understand that paying people a living wage has become a massive competitive advantage these days.

> their unique advantages

What are those? I never really found any sort of "unique advantage" of Costco. Certainly nothing to drive the extra distance past Sam's. While I had a membership, it was largely more expensive or didn't have what I wanted.

As a consumer, the advantage to Costco is they've done the product filtering for you. You can reasonably bet that whatever Costco has is in the upper echelons of good within that product category. Costco also ends up being cheaper if you do enough shopping there, because Costco's low prices are realized by the membership fees comprising the lion's share of their revenue.

As a merchant, Costco is significantly more efficient than other retailers due to a much leaner and simpler inventory because they only ever sell one or two brands of a given thing and only one or two things of a given brand. They don't have to deal with the overhead of unmoving stock, micromanagement of stock, and other such inefficiencies of non-scale.

All of these things are true. But the real advantage of Costco is that they’ve been consistent in their strategy for years. Having built a loyal customer base by offering high-quality products at reasonable prices, they haven’t shifted gears to raise prices or fill their stores with garbage products and coast on their brand recognition. This is shockingly unusual in today’s (US) economy.

Gas is cheaper. Pharmacy is cheaper, whether you have insurance or not. Perhaps more so if you don't have insurance. The regular stuff is good quality and cheaper than competition too. I don't even shop that much, but I still maintain the membership as I come out ahead even with my occasional shopping.

The gas alone is worth the membership.

My family saves about $1500/yr just at the optical center.

Every product at Costco is vetted or experimental. Either way, you’ll always be happy because if you don’t like it they have their eternal refund policy (refund at any time without a time limit)

The product return rates are also tied to customer data (membership scanning is required to pay). The better return data allows them to make better decisions on which products to boot.

They changed the return policy on some items to 90 days. Electronics comes to mind.

Product filtering: Low number of SKUs of high confidence. I can basically blindly pick up anything at a Costco and be assured of a certain basic quality. It's the opposite of a place like Amazon.

Customer filtering: The subscription model creates a high trust customer base with way lower chances of shoplifting, fraudulent returns and the like.

They also treat their employees well. (Not with free food or other so-called "tech" company nonsense). I have been impressed with the people from Costco I have met at conferences.

If you go in the back near the bathrooms, there's usually a wall of photos marked "25 years long service", and I noticed more recently one "40 years long service" (although a few of them had "retired now!" stickers).

That there's enough retention to justify that suggests they haven't burnt their employees too badly.

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