Understanding Costco Membership

In 1988, Robert Price, President of Price Club said, “We thought of it as a speak-easy. We tried to create a mystique.” At that time, the idea that you could charge people to shop was unimaginable and originally limited to businesses and members of select groups. However, Costco has created a business model that other retailers have since followed.

This month we will discuss Costco Membership, and shed light on the groundbreaking business model that no other retailer has quite been able to match. Included this month will be the following topics:

  • Gold Star Memberships
  • Business Memberships
  • Executive Cardholders
  • Rates and Retention
  • Added Benefits
  • Demographic
  • More Reasons to be a Member

If you are a supplier who is seeking to bring your product into a Costco warehouse or is interested to begin the process, VendorCo can help.  Call us at 949-326-8909 or email [email protected].

Reading Price Codes

In all retail establishments, items found on the sales floor will be accompanied by a price sign. Costco signs include the same basic information: a description, an internal identification number, a price, and supportive details about the item. However, Costco signage can often give away secret clues that can add to a shopper’s experience, but may be easily overlooked if you don’t know how to identify them.

Important to note, prices typically ending in “.97″ have been marked down. Other non-standard prices — such as items ending in .49, .79, .89 — are a sign that this is a special deal from the manufacturer. Sometimes there will be an asterisk (*) on the upper right-hand of the price tag, this indicates Costco does not have plans to re-order that product once the stock is sold out, so it’s important to move fast!

It is important to understand how Costco establishes pricing among vendors. If you are interested in submitting your product into Costco, it is vital to calculate all of the costs associated to your product. Contact one of our experts at [email protected] for more details about how our services best serve you.

Costco Allowances

Costco Allowances are an agreed upon percentage held from payment to settle any freight, demo, spoils, advertising, or other fees that may occur throughout the duration of a program. Allowances ensure that the vendor will not be burdened with an overbearing debit, thus protecting the vendor in the end. Allowance arrangements vary per item, department and Costco avenue and include considerations for shipping terms, payment terms, duration of the program, guarantee vs. full sale, geographical scope, etc. Some allowances pull from the full PO amount, while others (such as New Warehouse Allowances) only apply to the applicable units.

Many allowances are optional, but some may be required. With the flow of Costco’s buying process, if an allowance is required it may not be announced until after you have submitted pricing. It can be difficult to anticipate which allowances will be asked for. You clearly do not want to underestimate allowances, but you also do not want to build too much in that you overprice your item.

It is vital that allowance costs be factored appropriately into the price of your potential product. To successfully plan your price point and consider all possible allowances, partner with VendorCo – experts in Costco sales. Contact [email protected] for more details about how our services best serve you.

Non-Food Demos

Not all of Costco’s demonstrations are related to food products. In fact, there are several non-food items that can be demonstrated at Costco Warehouses as well. These stations would be set-up in alignment with the appropriate department you are selling to. Non-Food items demonstrations are a different approach than food items. Unlike food items, customers will not always have the “hands-on” approach and instant gratification to sample. Because of this, not all non-foods items would benefit from a demonstration, and those that do should be navigated carefully.

If you have a non-foods product and you are unsure whether a demo would be the best fit for you, then you may benefit from expert Costco representation through VendorCo. We become an extension of your sales team and help you make the best decisions for your company. To get started or for more information, contact us today at [email protected].

Costco Special Event

Costco Special Events are often referred to as Costco Road Shows. Either term adequately describes the nature of a special event, which is to display product in the stores for a limited time. Special Events immensely contribute to the treasure hunt atmosphere of Costco, and members know these products do not last long.

There are many advantages, as well as disadvantages to participating in a Costco Road Show. Ultimately, it is important to understand that Special Events are very different from in-line, national sales programs. For more information about Costco Road Shows/ Special Events, VendorCo offers an informative webinar that is sure to address your most pertinent questions. The webinar concludes with a question and answer session, where the webinar coordinator will happily answer any questions specific to your product or company.

To purchase a webinar, visit our services page at www.vendorco.com/book

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Included in your webinar purchase is an opportunity for a question and answer session. During this time, we are happy to answer any questions that are specific to your company or product. Worried about other attendees listening in on proprietary information? We are happy to answer questions via e-mail or on a secure line after the conclusion of the webinar.

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Inside Costco Warehouses: The Treasure Hunt

We can all agree that there are some deals at Costco that no one expected to find and buy upon arrival. Members do not shop at Costco merely to buy ordinary items, but they come for what co-founder James Sinegal calls the “Treasure Hunt”. The “Treasure Hunt” refers to the rare item or “rock bottom price” that the member cannot simply overlook. Like treasure, these items usually will disappear and be gone on the next visit. This type of turnover gives the members an urgency to buy before the offers are gone for good.

Members may go in for their routine staple purchases, but often come out with a bottle of Dom Perignon or Callaway golf clubs because they couldn’t pass up on such exceptional deals. These types of offers is what makes Costco an anticipated trip for members and keeps members coming back.

If you are interested in having your product enter a Costco warehouse, contact one of our experts to ensure a successful venture. Our experts maintain a high level of knowledge about Costco’s culture and buying process, contact us at [email protected].

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