An alternative "traffic" business, which earns $36,543.8 billion annually through membership fees.

As for Costco, Warren Buffett once told a joke: "On one occasion, two terrorists hijacked my plane with Charlie Thomas Munger, the vice chairman of the company, claiming that they could satisfy our last wish before executing us. Munger suggested that he talk about the advantages of Costco again. "

In the eyes of many Americans and Canadians, Costco not only represents a large shopping center, but also has become a mode of production for the middle class. In the field of new retail and new consumption, some institutions have also begun to study the Costco model and even started to invest in some "Costco-like" entrepreneurs.

Zero-profit explosive

As a traditional retail enterprise, the development of Costco started with two companies. 1976, Saul Price and his son Robert Price established the first brand-new member store-Price Club in San Diego, USA. 1983 In September, james sinegal and Jeffrey Bratman opened the first Costco supermarket in the suburb of Seattle.

1993, after a long period of negotiations, the price member store decided to merge with its old rival Costco to form Price Costco. This name has been used until 1999, and Costco changed its name to Costco Wholesale Company.

As a traditional retail enterprise, Costco has only opened 768 stores in1/kloc-0 countries and regions around the world, with an average store area of 1.3 million square meters. Among them, 533 are located in the United States, and 100 are located in Canada (data up to 20 18 1 1). In 20 18, the annual turnover of Costco has reached138.4 billion USD; As of 20 19 65438+ 10/0/day, the market value of the enterprise was 94.084 billion dollars.

In contrast, Wal-Mart, the world's largest retail supermarket, has more than 8,500 stores around the world, with an annual income of about 482,654.38 billion US dollars and a current market value of about 250 billion US dollars.

Obviously, Costco is far less bulky than Wal-Mart, but its single-store sales efficiency is much higher than Wal-Mart. The data shows that Costco's customer unit price is more than twice that of Wal-Mart, the floor efficiency ratio is twice that of Wal-Mart, the inventory turnover rate is 1.5 times that of Wal-Mart, and the operating rate is only half that of Wal-Mart.

Behind Costco's efficient operation is breaking the iron law of "customers are like clouds" in the traditional retail industry: to visit this supermarket, please pay an inexpensive membership fee first. In North America, the annual fee for non-executive members of Costco is $55, while that for executive members is $65,438 +0 10, and the annual fee rate is also rising.

However, not cheap membership fees have not dispelled the enthusiasm of consumers: Costco has 865,438+00,300 paid members worldwide; And in 20 18, the renewal rate of senior members reached 88%.

Such high customer loyalty depends on selected goods with extremely low profits.

In Wal-Mart, the number of inventory units (hereinafter referred to as "SKUs") exceeds several hundred thousand, while Costco only selects 3,700 SKUs, and all the goods on the shelves have to go through layers of review, and each product has only 1-3 brands. These selected goods are also sold at competitive low prices: Costco stipulates that the gross profit margin of all goods should not exceed 14%, and the average gross profit margin of goods after deducting membership fees is only about 10%, which is less than half that of competitor Wal-Mart.

For explosive goods, the price is even close to zero profit: for example, Costco brand roast chicken with annual sales of nearly 60 million pieces only sells for 4.99 US dollars; The hot dog soda combination sold in Costco fast food area only costs $65,438 +0.5, the price remains unchanged for 30 years, and the sales volume is four times that of Major League Baseball Stadium. These low-priced and explosive goods have attracted a large number of passengers and made great contributions to cultivating brand reputation.

Don't sell goods to make money.

In fact, Costco, which fascinated Warren Buffett and his partner Munger, did not make money by selling goods, but found another way to make a fuss about membership fees.

According to the 20 18 financial report released by Costco, the company achieved sales of138.4 billion US dollars in fiscal year 20 18, including commodity cost 123 10 billion US dollars, operating expenses13.8 billion US dollars, and the remaining/. In other words, Costco worked hard to sell nearly $654.38+04 billion worth of goods a year, and finally didn't make a penny.

But why can such a business be favored by Buffett and Munger?

In fact, Costco's most important profit source is membership fee income: in fiscal year 20 18, membership fee income was $365,438+$400 million, and the total profit returned to the enterprise was $365,438+$300 million. Membership fee income accounts for 2.2% of Costco's total income, but it has created 100% operating profit.

It is worth noting that during the period of 1996-20 18, the membership growth rate of Costco was almost completely synchronized with the profit growth rate. It can be said that the ultimate profit of this enterprise is almost only related to the number of members.

From this point of view, Costco has determined the final income that this member will bring to the enterprise in the next year when it resumes its annual meeting. Selling goods is just a way for Costco to retain its members.

Relying on membership fee income, Costco became the second largest retailer in the world: in the past decade, Costco's average net profit growth rate was 9%, and its stock rose as high as 322%.

The "Black Ship" of Japanese Retail Industry

1999, Costco is going to set up the first branch in Japan in Tokyo. However, Costco's business model of dealing directly with manufacturers was strongly opposed by its partners. Costco's arrival was called "black ship" by Japanese industry (1853, American brigadier general Perry threatened Japan to open the door with gunboats, which was called "black ship incident" in history).

At that time, Japan's economy had established a complex and stable commercial circulation system with distinct levels, which was difficult to break through. Many people think that the development of Costco in Japan may face an embarrassing situation of retreat.

"We have other customers, and we can't just treat Costco differently. But also consider the relationship with long-term cooperative middlemen. " In the negotiations with many suppliers, Costco's negotiators were repeatedly turned away. But they are still unwilling to give up and keep lobbying manufacturers: "Costco will help you tap the demand for new products that have not been noticed before and open up new market segments for manufacturers through large-scale packaging."

On the other hand, in order to reduce the concerns of suppliers, they changed their original plans, abandoned Tokyo and moved to the second-tier city of Fukuoka, hoping to open the incision from Fukuoka. This move has made many middlemen relax their vigilance, thinking that Costco has backed out and may even withdraw from Japan soon. Under the gradual weakening of the pressure of middlemen, manufacturers have also loosened their mouths. "If it is Fukuoka, direct trading will be fine."

After many twists and turns, the first store in Japan finally opened in 1999, and Costco began to gain a foothold in Japan. After 20 years of development, Costco has 26 stores and 8,700 employees in Japan, and it is still actively expanding.

"We firmly believe in the Costco concept of' good quality and low price, happy shopping'. No matter where we are, we can convey its benefits and members can understand it. Of course, it is necessary to make adjustments in line with local laws. " Trio said in an interview with a TV program in Tokyo that firmly believing in Costco's philosophy and adhering to good practices are the secrets of Costco's success.