Comment by legitster | Hacker News Reader

Comment by legitster | Hacker News Reader

I grew up in a post soviet country. To me Costco, has perfected the soviet ideal of shopping more than any soviet economy ever could.

In a Costco, we are all equal. I could be shopping for the same set of beige slacks right next to the CEO of a multi-million dollar company and never know it. We'll own the same Waterpik. Identical towels. Our lawn furniture will look the same.

Everything is purchased at a fair price. And we know it's a fair price because it's Costco. The workers are happy because they are given a fair wage and respect by an executive team that doesn't think they're better than them.

Yes, you have to admit to yourself that a certain part of shopping at Costco is rejecting iconoclasm. You must be okay being part of a crowd. But the other side of that - are you able to surrender? Can you deny yourself when you find something that is legitimately good? Must you be different to the point of self-detrimental?

So yes, I will go to a store that has better olive oil or coffee or oranges. But how can you not love Costco?

> But how can you not love Costco?

I got my law degree there!

I like money.

Interestingly, my local subreddit loves to describe Costco as a late stage capitalist dystopia.

- fighting for space everywhere: fighting for a parking lot, avoiding people seeming to ram you with their shopping cart, waiting for the extended family of seven in front of you to pick a cereal so you can leave the aisle, waiting for traffic to clear so you can _leave_ the costco

- you have to pay to get in

- and then you have to pay extra to jump to the head of the line

- fights over rare stock like pokemon cards

It's wild that you can look at a physical testament of the sheer abundance and affordability that capitalism has created for almost every consumer good, and people will call it a dystopia because they experience traffic or fight over the right to buy cardboard childrens toys

Would the world really be worse off without cardboard children's toys but also without people fighting over cardboard children's toys?

There is nothing about Costco that is causing the fighting.

It's entirely a unrelated subculture going insane about pumping up the prices of pieces of cardboard, and 30's-ish adults who never grew up mentally but now have disposable income.

Normal people buy whatever packs for the kids who proceed to play the game completely wrong.

I guess it feels less abundant when there's a million people in the store and you're basically in line to check out the minute you step in.

This is Costco literally suffering from success, they have had an enormous growth in subscriptions yet opening stores takes time, faces regulations, has limited availability

Ah yes, the bread lines were a sign of Soviet success! Enormous growth in demand they just had trouble keeping up with!

Could you please review and follow the site guidelines when posting here? Your account has unfortunately been breaking them in a few places. (Other examples: https://news.ycombinator.com/item?id=48045387, https://news.ycombinator.com/item?id=46948554).

Fortunately you're a good contributor generally, so this should be easy to fix. We'd appreciate it.

Look, I get that everybody has a job and can't go during the week, but if you're going to Costco outside of working hours, you're doing it wrong. I dunno about fighting over pokemon cards, which like you do you, but crowding doesn't happen at 10 am on a tuesday.

people on reddit describe literally everything as late stage capitalist dystopia

Good comment, but IMHO the main reason to not love it so much is the annual membership fee. It sits well with cult cultivation. Other stores don't require it and they don't form a cult around them.

But the fee isn't an initiation ritual. It's what partially subsidizes the low prices, often at the expense of people who buy the membership and underutilize it, spending more money upfront than they save on later purchases.

Costco derives the majority of their revenue from the membership fee, followed by services. They actually make very little on the products themselves as they have a hard cap on markups at like 11% or something around there.

The membership is the whole reason they can offer the deals they do.

> Costco derives the majority of their revenue from the membership fee,

Costco revenue is about 2% membership fee and 98% sales of merchandise and services (most of which is merchandise, not services.)

Now, the membership fee is its main source of profit (because the merchandise sales are extremely low margin), but not its main source of revenue.

> Costco derives the majority of their revenue from the membership fee […]

Costco derives the majority of their profits from the membership fee:

* https://en.wikipedia.org/wiki/Costco#Business_model

The yearly fee is $65. If you save $5/month on what you buy you break even. Personally I save over $5/month just buying butter there vs buying from my local supermarket.

Most people can do even better with the executive membership if you spend ~$550 a month you'll get the $130 fee back in your rebate. That may seem like a lot but not if you buy most of your groceries there, or things like tires or book a vacation.

We get like 4-5x our exec. membership fee back in rewards cost every year - and I stopped buying tires/car batteries there (takes too long / quality no longer as good) and usually go to best buy for electronics (their return policy is no longer as good, and they often stock sub-par models, etc). Even with that, Costo is essentially paying us to save money.

Yeah, with TVs, Costcos in our area only stock one tier of Samsung models, but "worse" they're recently the 2-3 year old model that has already been superseded. And while the markup is minimal, you're still paying retail for a 3 year old model. Shades of Apple selling the Mac Pro 2019 (cheese grater) with a 4 year old Xeon processor at "full Apple" prices (I almost said full retail, but full Apple is a bit more), and with RAM prices from 4 years prior, too.

On the contrary, the fact that they exclude free riders is what makes the whole thing possible.

The price is so low that it makes no real difference at this point. I barely go to my local CostCo (on the edge of being worth the annual fee myself!) because it's so incredibly crowded at all times that the savings are only worth it for more expensive items. In contrast, there are several BJ's nearby and the closest one to me is often blissfully sparse. No idea how they manage to stay in business in that location, but it's really nice.

There is no such thing as a free rider in this context, only a fee rider. After all, other supermarkets do fine without a fee. This is not Amazon Prime with free shipping that we're talking about. Charging for just the item still works.

The annual membership fee is about customer selection, for me.

What it buys for me is, "not Walmart People". Totally worth the investment.

right, it buys Costco people. my local Haggens is a veritable paradise by comparison to the overcrowded warehouse that's too far away and closes too early to shop at after work. don't get me started on Fred Meyer clientele

I occasionally go into a Walmart. If a modest membership fee keeps those people out, I'm all for it.

I know what you're thinking, but if a Costco membership is elitism, then fine you can call me elitist. Along with apparently 30% of the American population over the age of 18. We're the big bad 30-percenters, I guess.

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