Costco: Ranking #10 On the Fortune 500

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The worldwide headquarters of Costco are in Issaquah, Washington, an eastern suburb of Seattle, although its Kirkland Signature house label bears its former spot in Kirkland. The company initiated its first warehouse in Seattle in 1983. Costco constantly opens new locations. The company projects to open warehouses in 2022 for the first time in New Zealand and Sweden.

In 1993, Costco and Price Club allowed to merge operations themselves after Price rejected a suggestion from Walmart to connect Price Club with their warehouse store chain, Sam’s Club. As a result, PriceCostco owned 206 locations generating $16 billion in annual sales. In 2021, Costco was rated #10 on the Fortune 500 rankings of the largest United States corporations by cumulative revenue.

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Finances

For the financial year 2019, Costco reported earnings of US$3.659 billion, with annual revenue of US$152.703 billion, an improvement of 7.9% over the previous fiscal cycle. Costco’s divisions traded at over $205 per share, and its business capitalization was estimated at over US$95.7 billion in October 2018.

  • Business model: Costco is a membership-only warehouse that generates most of its revenue from retail sales and a small percentage from membership fees. Costco distributes its venture into three segments: United States Operations, Canadian Operations, and International Operations. These three business divisions are listed by revenue and operating income.
  • Sales model: The rule is that no conventional item may be marked up higher than 14% over cost, and no Kirkland Signature article may be marked up higher than 15% over Price. The company runs very leanly, with overhead expenses at about 10% of revenue and profit boundaries at 2%.

Lighting costs are decreased on sunny days, as most Costco locations have many skylights. During the day, electronic light meters regulate how much light is coming in the skylights and set off an appropriate portion of the interior lights.

  • Online shopping: Costco primarily focuses on getting members to come into a warehouse for purchases instead of ordering products online. Due to the COVID-19 pandemic, Costco’s online businesses expanded dramatically, with more online sales extensions in 2020 than the past five years combined. In addition, in October 2017, Costco started same-day and two-day grocery delivery opportunities for members.
  • Products: Costco sells many products like art, books, caskets, clothing, computer software, fine wine, furniture, home appliances, home electronics, hot tubs, jewellery, perishable items, solar panels, tires, and vacuum cleaners.
  • Kirkland Signature: Kirkland Signature marked bottled water, conceived in 2005. “Kirkland Signature” is Costco’s private label. It is marketed by Costco on its website and warehouses and is trademarked by the company.
  • Costco Auto Program: As of September 2015, Costco was the second largest auto seller in the US, just behind AutoNation. Costco frequently teams up with several automobile manufacturers to extend exclusive deals to customers.
  • Costco Auto and Home Insurance: Costco deals with CONNECT, powered by American Family Insurance, for auto insurance, home insurance and umbrella insurance.
  • Costco business services: NOVA Information Systems (NOVA) partnered with Costco to market on March 9, 2005, and got support payment processing services to Costco Canada’s Business Executive Members.
  • Costco photo services: Costco Photo Center is a multi-functional photography printing service offering photo items through its website, costcophotocenter.com.
  • Costco Optical: Costco Optical ranks as the fifth-largest optical company in the US as of 2015. Optometrists serving at Costco spots will examine patients without Costco memberships.
  • Costco Travel: Costco Travel is a wholly-owned subsidiary of Costco Wholesale and allows leisure travel to Costco members of the US and Canada. The schedule was established in 2000 as an assistant to Costco members.