Costco Wholesale Corporation and its subsidiaries (Costco) principally engage in the operation of membership warehouses in the United States (U.S.) and Puerto Rico, Canada, Mexico, Japan, the United Kingdom (U.K.), Korea, Australia, Taiwan, China, Spain, France, Iceland, New Zealand, and Sweden.
Costco operated 890 warehouses worldwide at September 1, 2024. The company operates e-commerce sites in the U.S., Canada, Mexico, the U.K., Korea, Taiwan, Japan, and Australia.
The company operates mem...
Costco Wholesale Corporation and its subsidiaries (Costco) principally engage in the operation of membership warehouses in the United States (U.S.) and Puerto Rico, Canada, Mexico, Japan, the United Kingdom (U.K.), Korea, Australia, Taiwan, China, Spain, France, Iceland, New Zealand, and Sweden.
Costco operated 890 warehouses worldwide at September 1, 2024. The company operates e-commerce sites in the U.S., Canada, Mexico, the U.K., Korea, Taiwan, Japan, and Australia.
The company operates membership warehouses and e-commerce sites based on the concept that offering the company’s members low prices on a limited selection of nationally-branded and private-label products in a wide range of categories will produce high sales volumes and rapid inventory turnover.
The company buys most of its merchandise directly from suppliers and route it to cross-docking consolidation points (depots) or directly to the company’s warehouses. The company’s depots receive large shipments from suppliers and quickly ship these goods to warehouses. This process creates freight volume and handling efficiencies, lowering costs associated with traditional multiple-step distribution channels. The company’s e-commerce operations ship merchandise through the company’s depots and logistics operations, as well as through drop-ship and other delivery arrangements with the company’s suppliers.
The company’s average warehouse space is approximately 147,000 square feet, with newer units being slightly larger. By strictly controlling the entrances and exits and using a membership format, the company’s inventory losses (shrinkage) are well below those of typical retail operations.
The company’s warehouses on average operate on a seven-day, 70-hour week. With variations by country, the company’s warehouses accept certain credit cards, including Costco co-branded cards, debit cards, cash and checks, Executive member 2% reward certificates, co-brand cardholder rebates, and the company’s proprietary stored-value card (shop card).
The company’s strategy is to provide its members with a broad range of high-quality merchandise at prices that are consistently lower than elsewhere. The company seeks to limit most items to fast-selling models, sizes, and colors. The company carries less than 4,000 active stock keeping units (SKUs) per warehouse in the company’s core warehouse business, significantly less than other broadline retailers. The company averages anywhere from 9,000 to 10,000 SKUs online, some of which are available in the company’s warehouses. Many consumable products are offered for sale in case, carton, or multiple-pack quantities only.
To promote member satisfaction, the company generally accepts returns of merchandise. On certain electronic items, the company typically has a 90-day return policy and provide, free of charge, technical support services, as well as an extended warranty. Additional third-party warranty coverage is sold on certain electronic items.
The company offers merchandise and services in the following categories:
Core Merchandise Categories (or core business):
Foods and Sundries (including sundries, dry grocery, candy, cooler, freezer, deli, liquor, and tobacco).
Non-Foods (including major appliances, small electronics, health and beauty aids, hardware, lawn and garden, sporting goods, tires, toys and seasonal, office supplies, automotive, stamps, tickets, apparel, furniture, domestics, housewares, special order kiosk, and jewelry).
Fresh Foods (including meat, produce, service deli, and bakery).
Warehouse Ancillary (includes gasoline, pharmacy, optical, food court, hearing aids, and tire installation).
Other Businesses (includes e-commerce, business centers, travel, and other).
Warehouse ancillary operates primarily within or next to the company’s warehouses, encouraging members to shop more frequently. The number of warehouses with gas stations varies significantly by country, and the company has no gasoline business in Korea or Sweden. The company operated 719 gas stations at the end of 2024. The company’s gasoline business represented approximately 12% of total net sales in 2024.
The company’s other businesses sell products and services that complement the company’s warehouse operations. The company’s e-commerce operations give members convenience and a broader selection of goods and services. Net sales for e-commerce represented approximately 7% of total net sales in 2024. Digitally originated sales, which represents sales that a member initiates through a digitally enabled device, including e-commerce, business delivery, travel, and same-day grocery, represented approximately 9% of total net sales in 2024. The company’s business centers carry items tailored specifically for food services, convenience stores and offices, and offer walk-in shopping and deliveries. Business centers are included in the company’s total warehouse count.
Costco Travel offers vacation packages, car rentals, cruises and other travel products exclusively for Costco members (offered in the U.S., Canada, and the U.K.).
The company has direct relationships with many producers of brand-name merchandise. The company does not obtain a significant portion of merchandise from any one supplier. The company also purchases and manufactures private-label merchandise, as long as quality and member demand are high and the value to the company’s members is significant.
Membership
The company’s members may utilize their memberships at all of the company’s warehouses and e-commerce sites.
Competition
Walmart, Target, Kroger, and Amazon are among the company’s significant general merchandise retail competitors in the U.S. The company also compete with other warehouse clubs, including Walmart’s Sam’s Club and BJ’s Wholesale Club in the U.S.
Intellectual Property
The company has invested significantly in the development and protection of the company’s well-recognized brands, including the Costco Wholesale trademarks and the company’s private-label brand, Kirkland Signature.
History
Costco Wholesale Corporation was founded in 1976. The company was incorporated in 1987.