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 949-600-7688 or email help@vendorco.com.

Inside Costcos Corporate Office

Costco has multiple regional offices with the national headquarters located in Issaquah, Washington. Originally, Costco’s corporate offices were stationed in Kirkland, WA. You may recognize Costco’s Private Label Brand name as Kirkland Signature, a way of paying homage to the origins of this retail powerhouse.

Former CEO, Jim Sinegal, was a native Californian but found Costco’s home in Washington, where Costco is now a household name. In fact, the city of Issaquah recently signed a 30 year agreement with Costco allowing them to expand its headquarters.

To learn more about Costco from our Executive Account Manager, who has experience working in their national headquarters, call us at 949-600-7688 or email help@vendorco.com.

More Information

Although getting your products through the early stages of program development is a step in the right direction, establishing a price is perhaps one of the more pertinent steps that a vendor will set out to accomplish. Establishing a price is paramount with what visions you have set out with your company and with Costco. This will take careful consideration of key costs and hidden costs that are most often times more difficult for the seller to anticipate.

It is important that you understand how Costco functions and operates when you negotiate pricing with the warehouse company. Costco’s pricing structure varies greatly from other retailers that you may be accustomed to. Partnering with a manufacturer representative could be the key difference piece to creating a Costco appropriate sell price. To learn more about pricing your product, get help from a representative at VendorCo to help get you situated. Contact us at: help@vendorco.com.

Costco EDI Fees

If you are interested in becoming a vendor at Costco, it is required that you use an Electronic Data Interchange (EDI) system prior to the start of sales. EDI systems are popular amongst retailers, and it is how Costco organizes and disseminates information concerning their complex logistical and ordering procedures. EDI systems allow two parties to electronically exchange documents without the use of email, fax or mail. For Costco’s purposes, these documents may include purchase orders, invoices, shipping notices, bill of ladings, and more.

This communication service can be pricey, and must be compliant with Costco’s requirements. Costco utilizes two EDI service companies for in-store or online ordering. If you are already set-up with EDI for other retailers, do not assume that you are prepared for Costco. There may be costs associated with set up, regardless of your current capabilities.

If you are interested in partnering with a manufacturer representative, and starting out your Costco program right, then contact VendorCo today at sales@vendorco.com. We will ensure you are fully informed of the EDI requirements, pricing, and procedures to get the most out of your program.

Costco Regional Sales: Departments

Common knowledge to both consumers, manufacturers, factories, buyers, etc. is the concept of splitting up items by department. Products are categorized together based on function and familiarity and organized accordingly on both the physical sales floors and the digital web store. This is true for nearly all retail outlets. Costco’s regional offices are split up according to departments similarly to the national office.

For some items, you may find that Costco’s department breakdown differs from other retail avenues. Perhaps your item falls into the Lawn & Garden category within your retailer’s ecommerce department. You may be surprised to find that Costco’s department crossover could land you in Sporting Goods, or even Hardware. Additionally, some of the larger departments within Costco are split up between two buyers, so you may have to dig even deeper to identify your department.

Department identification is pretty black and white for some items – for instance, a couch will always be furniture. However, for some of the more niche, creative items that fill a unique consumer need, it could help to have an extra set of eyes review before identifying your department. This is important for correctly identifying the right buyer, so your first attempt at pitching your product is navigated correctly. VendorCo can help with this. Contact us today at help@vendorco.com. We can help cut the guess work and get your item in front of the right person.

How can I gain access to Costco’s vendor portal?

Costco’s vendor portal, also known as Costco’s Extranet, is a web based system that provides Costco vendors with access to a plethora of important information. The system is a free and secure accounting tool that allows vendors to track and maintain records of purchases and payments.

And it doesn’t stop there. The vendor portal keeps updated records of important forms and memos as they are released by Costco, as well as additional vendor maintenance and vendor services tools.

However, the extranet is only available to Costco vendors with a valid vendor number. Potential vendors do not have access to Costco’s vendor portal until they receive a vendor number.

If you need help getting your program accepted with Costco, contact us today to see how VendorCo can help at help@vendorco.com or (949) 600-7688

How can I get a Costco buyer list?

Costco no longer provides buyer lists to vendors. You are able to call their corporate office to get the name and information of the appropriate buyer for your department. However, buyers are constantly rotating departments and moving positions, so it is important to stay on top of your department’s movements.

VendorCo maintains our own internal buyer list based on the contacts that we communicate with on a daily basis. Please know that we are not able to share this information with anyone outside of our clientele list. If you are simply looking for the contact information of your Costco buyer, please contact Costco directly.

If you are interested in becoming a VendorCo client, not only will you benefit from up-to-date buyer information, but we will help channel the communications for you. We are in contact with many of the top personnel and buyers at Costco on a daily basis, and can help bring your product to the buyer through a familiar face. For more information, contact us at help@vendorco.com, or (949) 600-7688

Costco In-Store “Deal Breakers”

Countless manufacturers and service providers have attempted to sell their products to Costco in-store. More often than not, these hopeful vendors are turned away. Due to Costco’s limited sku count and strict requirements, it can be very difficult for potential sellers to stand out and rise above the competition. So before you proceed with presenting to Costco or even before you partner with a sales representative, you should be aware of a couple non-negotiable requirements, or “deal breakers” for a vendor relationship.

First, Costco will not be the majority of any vendors business. In other words, you must have established distribution and sales before proceeding with Costco. Costco is not the place to introduce your product into the market, and you will not be considered if you do not have established distribution. And secondly, you must be prepared to serve the Costco member by providing your product at a lower cost and/or higher value.

If you believe that your company may be qualified for Costco in-store sales, contact VendorCo to get the most out of your program, at help@vendorco.com

Costco.com Advertising Opportunities

One of Costco’s most popular advertising options is the Costco Connection magazine, which is mailed to over 8 million Executive and Business Member homes, and is also available online for free download. While the Costco Connection is available for in-store items, there is an exclusive Costco.com insert which displays a limited number of items that are exclusive to Costco.com.

Additional Costco.com advertising opportunities include the Costco.com mailer, multi-vendor mailer, e-mail campaigns, new product category featured page, home page placement, themed landing pages, and display advertisements. All of these advertising options are targeted to reach Costco’s best members, and the reasonable prices may surprise you! More details, including demographic data and pricing, are available to our clients and Costco.com vendors.

The above mentioned paid advertising options are not the only way for Costco vendors to excel on Costco.com. Additional sales opportunities are also available, and you can read all about them on our next blog.

Costco National

Costco national sales tend to be the most lucrative. If your product is accepted for a national sales program, it is distributed to warehouses all across the United States. Your product may not be in every warehouse, but it will be distributed throughout all Costco regions.

National sales are intended for established manufacturers that have existing distribution and a nationally recognized brand or product. It is not easy to receive a purchase order for national sales, which is why most vendors choose to partner with a manufacturer representative.

VendorCo has a history of successful product placement, and over 20 years of hands of experience. If you are looking for a qualified, successful representation company, VendorCo is the right choice.

Contact us at Costco@vendorco.com to get started!