Why are prices in stores like Costco and Sam’s Club much cheaper than your average grocery store?
In: 226
They don’t sell just anything, you will notice that while the core offerings are fairly consistent, the overall items they sell changes throughout the year. They are spot buying what they can get at a large discount.
Because they offer far less “choice” than a regular store, they will buy significantly larger lots of a smaller number of items. This kind of bulk buying gets them discounts because the manufacturer that sells it to them is assured a large transaction. The seller has a streamlined process to only ship to a small number of stores and the buyer (Costco, etc) can receive fewer but larger shipments. Much more efficient.
They in turn sell to consumers in larger lots. Big boxes, full cases, big bottles. They eliminate the inefficiencies of lots of small things, and only stock, inventory, and process at checkout large efficient units.
The stores are also designed to be very efficient with bulk storage right where it’s needed. It not fancy, but makes their jobs of managing inventory much easier.
Lastly some charge membership. The people who are shopping are willing to stake $50 a year to do so. They want be there and quickly learn the drill. That gets them in and out of there more efficiently.
(Edited to clarify 1st paragraph)
Latest Answers