Seriously thinking of canceling Costco card

[joec]

[quote=La Jolla Renter]Just saw this in a email feed. Great read.

http://www.forbes.com/sites/robinlewis/2016/02/16/costcoholics-costcos-113-7-billion-addicts/#75b0955a5f73

...the over 75 million “mainlining” Costco members (and growing at a high single digit percentage rate annually), with an average annual income of $100,000, paying a $55 annual membership fee (or $110 for an executive level membership). Three million members a day enter Costco’s stores to get their fix.

Yes, you read those numbers right. In today’s over-stored and over-stuffed retail environment, the equivalent of almost one-fifth of the U.S. population is paying for the privilege to shop at a particular store. And this is not a one-off, let’s-see-what-it’s-like kind of visit. The renewal rate is a whopping 90 percent each year. I guess that captures the power of an addict’s behavior.

Not only is 80 percent of Costco’s gross margin and 70 percent of its operating income derived from its Costcoholics’ membership fees, Costco collects most of its profits 12 months in advance, not at the eleventh hour of the fiscal year like most other retailers.[/quote]

A good about Costco is that they have a rule that limits their profit margins to a small number. Investors have been urging them to raise prices and increase margins, but they have resisted for 40+ years...They still sell $1.50 hotdogs.

This is why they try to make money from their memberships since they aren't making much on everything they sell. Also, their warranty for stuff is pretty much top notch. They changed electronics due to people abusing it, but most other items still can be returned without much, if any hassles.

Amazon is trying to do this with their Prime, but if you check prices, you'll notice that Amazon prices are pretty bad now most of the time...Also, returns AREN'T free for a lot of items and service has suffered as they try to start making money (counterfeit items, poor packing, etc...)

They also overprice their MSRP for a lot of products (to make it look cheaper (greater percent off)) and purposely delay shipment of items if you aren't a prime member.

Sometimes, prime, you also have to "wait" while they process your order before 2 day ship...

Amazon also has a history of undercutting rivals till they are dead, then raise prices after they are gone. Or they buy whoever they can't beat...

Yes, I am not a fan of Amazon...anymore.

[livinincali]

Looks like the new Costco Visa by Citi is going to be quite good and better than the previous AMEX card.

4% cash back on gas
3% cash back on dinning and travel
2% cash back on Costco purchases
1% cash back on everything else.

https://www.citi.com/credit-cards/creditcards/citi.action?ID=citi-costco-credit-card-conversion

[plm]

Looking forward to the Visa card since it seems better in every way than the Amex card. Is there any reason to apply for the new Amex other than their offer of $250 for spending $1000?

I could get an easy $250 but I don’t think I would ever have a reason to use the new Amex instead since everyone takes Visa and the Costco Visa will be better.

[njtosd]

Years ago I had a client that manufactured a popular food brand. It’s been around forever. One day I got a call about a labeling issue. They said that they were making a new product for Costco – wanted a different brand to use with that product. It made me realize that companies aren’t just repackaging the same thing they are selling in other stores and selling it at Costco. They are creating something that can be sold at Costco prices – perhaps not quite the same quality, etc. Obviously this is not true of everything – I’m sure Costco Coke and Von’s Coke are identical. It made me wonder, though.

[livinincali]

[quote=njtosd]Years ago I had a client that manufactured a popular food brand. It’s been around forever. One day I got a call about a labeling issue. They said that they were making a new product for Costco – wanted a different brand to use with that product. It made me realize that companies aren’t just repackaging the same thing they are selling in other stores and selling it at Costco. They are creating something that can be sold at Costco prices – perhaps not quite the same quality, etc. Obviously this is not true of everything – I’m sure Costco Coke and Von’s Coke are identical. It made me wonder, though.[/quote]

Some things sold at Costco are instead specific to Costco and could suffer some degradation. Electronics are probably the most prevalent items that fall in this category but manufactures do the same thing for Black Friday type deals as well. You might use an inferior panel or leave out chips that enable certain no core features. For some of us that might be a good thing. I’m not sure I want the voice activation chip in my tv anyways.

[moneymaker]

Got my new Costco visa card today, not good until June 20. Also after buying the strawberry jam found out it is organic, just doesn’t say so on the label, won’t be buying that again (too thin). Visio TV I bought 4 1/2 years ago was having issues but turned out to be a setting for ambient light. All-in-all I will keep my membership and just try to be a better shopper there. GTM resells a lot of Costco’s returns at discounted prices so do also go there (I can buy a single gallon of milk instead of 2).

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