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Comment by ianb | Hacker News Reader

Can someone tell me how exactly Instacart is working this? Do they have an agreement with Costco? (I'm guessing not.) Do they have individual shoppers who just do their thing as though they were individuals, and then deliver? Are those individuals employees or freelancers?

I'm guessing Costco would be a bit reluctant to formally allow something like this, as I also presume that one reason they get lower prices from suppliers is that they only sell to members, so there is less of a perception that a supplier is undercutting other retailers by letting Costco sell at a reduced price. A sort of price discrimination... but if stuff gets resold without a markup to bring the price in line with other retailers it would make their negotiations more difficult.

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Costco allows you to buy items for resell and even uses your Tax ID so they don't charge you sales tax on items for resell.

Yes, this. Many small businesses and restaurants use and resell products from Costco.

I was wondering the exact same thing. I'd imagine that they'd use shoppers who have personal memberships and then reimburse. If they had Instacart-only memberships, it would be much easier for Costco to target and cancel those accounts.

Any agreement between Costco and Instacart would basically be endorsing a method of skirting the annual membership fees, something Costco would most likely never be interested in. However, as a Costco member, I would absolutely love this. No more "Cart" rage on Saturdays!

I was wondering the same thing. Why have a personal membership anymore when I can just utilise instacart to deliver it. Personally, incorporating Costco's selection is a big plus for me.

Now... if anyone is interested in insta-gas delivery, hit me up. ;)

I don't know the answer to your question, but isn't Instacart free to resell anything they bought at Costco? So would they even need an agreement from them?

Because Costco is a paid membership service. I assume reselling is against their membership agreement. It'd be difficult to enforce, especially on the scale they probably operate at, but still.

EDIT: It's not. I somehow assumed it would be. Interesting to know it isn't.

Former Costco employee here - nope. A lot of the point of the store is reselling large items to small companies. Not many families need gallon jugs of butter or 100lbs bags of rice, but tons of restaurants do.

That being said, the reselling is normally for people who do something with it (ie cook the food, print with the ink, etc), not turn around and sell the exact same product.

When I lived in the Mission the guys who ran the bodega across the street bought half the stuff they sold from the SOMA Costco.

Ahh, good to know. I figured doing another retail transaction would be against the TOS. Thanks for clarifying.

"Reselling against their membership agreement"?! Uh, not likely - I think half of the corner stores, and most of the low-end restaurants and delis, around here buy at least some of their inventory from Costco.

I'm guessing Costco's business is at least somewhat dependent on having successful resellers buy from Costco!

The first and obvious concern might be over using Costco's name.

They're free to resell anything they manage to buy from Costco, but first they have to buy it. To buy it, they must have a valid Costco membership. Looking over the membership agreement, Costco reserves the right to terminate a membership at any time, see page 14 of http://content.costco.com/Images/Content/Misc/PDF/09EX0308_S... , in the "Membership Cards and Fees" section. If they decide they don't like this, they've already got the verbiage to lock any given shopper out. (I do not know if they will or not, or if Instacart has a negotiated deal with Costco, which would be wise of them.)

Costco executive membership offers 2% rebate on everything you buy - this is probably a non-trivial source of revenue for Instacart.

Costco is probably getting a cut (hence the higher fee), but I'd love to hear some concrete info from Apoorva (the founder), who already commented in this discussion.

I'm guessing there is no agreement with Costco since there was no response from "apoorvamehta" who has answered questions in this thread.

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