How Does Costco Make Money

Costco makes most of its money from selling merchandise products at low cost, yet in bulk, through its warehouses, which act as stores, and a small, yet much higher margin chunk of revenue comes from its memberships. For instance, in 2022, Costco made almost $227 billion in revenue, of which $5.84 billion came from membership revenue. Related Visual Stories Costco Business Model Costco's strategy can be summarized as a selection of high-quality items sold in bulk sized in warehouses around the US and Canada primarily and with a substantial part of its business focused on selling merchandise at a low-profit margin. Costco also uses a single-step distribution strategy to sell its inventory before it gets paid to suppliers. Costco generated almost $227 billion in revenue in 2022, of which $5.84B came from 65 million paid members. Costco SWOT Analysis Costco is a large American multinational corporation with a focus on low-cost, membership-only retail warehouse clubs. Costco is the 4th largest retail operator in the world, operating 785 warehouses in 10 different countries. Indeed, it has enjoyed rapid success growing from zero to $3 billion in sales within six years. Who Owns Costco Costco runs a high-quality, low-priced business model powered by its memberships that draw customers' loyalty and repeat purchases. Top institutional investors comprise The Vanguard Group, 8.79%, and BlackRock, 6.77%. Top individual shareholders include Craig Jelinek, Chief Executive Officer of Costco, and Charles T. Munger (Warren Buffet partner and co-owner of Berkshire Hathaway). Wholesale Business Model The wholesale model is a selling model where wholesalers sell their products in bulk to a retailer at a discounted price. The retailer then on-sells the products to consumers at a higher price. In the wholesale model, a wholesaler sells products in bulk to retail outlets for onward sale. Occasionally, the wholesaler sells direct to the consumer, with supermarket giant Costco the most obvious example. Costco Financials Costco generated almost $227 billion in revenue in 2022, compared to nearly $196 billion in revenue in 2021, and over $166 billion in revenue, in 2020. Costco also generated $5.84 billion in net income in 2022, compared to $5 billion in 2021 and $5 billion in 2020. Costco Employees Costcohad 304,000 employees in 2022, compared to 288,000 in 2021 and 273,000 in 2020. Costco Members Costo had 65.8 million paid members in 2022, compared to 61.7 million in 2021 and 58.1 million in 2020. Costco Membership Revenue Costco generated $4.2 billion in membership revenue in 2022, compared to $3.87 billion in 2021 and $3.54 in 2020.

How Does Costco Make Money

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Gennaro Cuofano