What You Can Learn From Costco’s Business Model

What You Can Learn From Costco's Business Model
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I haven’t been to Costco in a while, but today, my brother asked me to join him for grocery shopping at our local Costco warehouse. There, I was amazed by their business model and that’s why I decided to share it with you all.

If you have a Costco in your area, you should know exactly how successful they are in the retail industry. Costco is a go-to location for a variety of products and services including gas, tires, groceries, electronics, and more. Not only do they carry a wide selection of merchandise, but at an affordable price.

In this article, I will go over what you can learn from Costco’s business model and how you can apply it to your online business today! Without further ado, let’s get started.

The Membership Model

By charging a membership, it gives the consumers an exclusive feel when entering their stores. The membership ranges from $55-$110.00 per year (pure profit). It doesn’t sound like much, but when you consider how many members Costco has, the number can be astronomical.

With this membership, it also entices their customers to come back and shop more frequently. It’s almost like paying for a gym membership. When you’re paying for a membership, it doesn’t feel right if you don’t go to the gym.

What you can learn from this: As an affiliate marketer, you’re probably not going to have membership on your blog. However, if you’re offering a product of your own, you can charge people for memberships if they wish to continue using your product.

The Super Affordable Hotdogs

You can’t talk about Costco without talking about their super affordable hot dogs. At $1.50, you’ll get a full-size hot dog with a fountain drink. Now that my friend, is a great deal!

Now you’re probably wondering why they would offer their food at such an affordable price. How can they stay profitable with it? Well, Costco is not stupid, they know exactly what they are doing.

You see, most people don’t go to Costco just to buy a hot dog or pizza. While you’re there, Costco is hoping that you’ll enter the store and buy a few hundred dollars worth of merchandise.

Costco is not trying to profit from selling their hot dogs. As a matter of fact, they are more than happy to lose money when selling their hot dogs!

What they are hoping to accomplish here is to make it all back plus more when you go into the warehouse and buy their other products.

What You Can Learn From This: As an affiliate marketer, we consider the hot dog a lead magnet. It’s a low cost product designed to bring in customers. Once customers are there, they can then market more expensive products.

In Conclusion

With their membership business model, Costco can afford to sell customers their goods at a price even Amazon couldn’t beat. Because of the attractive deals they offer to their consumers, their loyal shoppers continues to renew their membership year after year.

As an affiliate marketer, you can really learn a thing or two from Costco’s business model. Offer lead magnets such as an eBook to your audience to entice them to opt-in for your mailing list. This will help you generate repeat business.

Most importantly, you need to build a relationship with your readers. Once you have loyal readers who sees the value in your content or product. They will always come back to you for more.

Let me know what you think about Costco’s business model by leaving a comment down below!

Kind Regards,

home, make money online home, make money online now, make money working from home, niche, niche website, self employed, SEO
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What You Can Learn From Costco's Business Model
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12 thoughts on “What You Can Learn From Costco’s Business Model”

  1. Hi Eric,
    Thanks for insight on very practical ways we can mimic Costco’s model. And it’s so true, I go for cheap lunch and come out with tons of stuff.

  2. I agree, give away something in return for repeat business which equals big profits. It's like going to the bank or insurance company and the pen is tied to a chain! Give away the pen with your branded logo on it and the word will spread. But what about someone just starting out with little capital and they might not be able to give something away what would you recommend in that situation?

  3. Hello Topiej,

    For the person starting out, you can offer digital products or consulting services that won't cost you money. For example, I created a eBook based on my own experience in the field of making money online. It cost me nothing, but time to prepare and zero cost for distribution. My friend didn't want to write an eBook, so instead, he created a checklist on how to save money while still living a comfortable life.

    Cheers,
    Eric

  4. Hi Nicole,

    You are very welcome! I was actually at Costco yesterday looking to get a hotdog and a chicken bake... ended up buying $200.00 worth of merchandise haha.

    Cheers,
    Eric

  5. I like the message. I have created a free e-book for my site and will have that set up to give to my readers soon. I hope that gets them to buy something and come back for more. Great ideas.

  6. Hi Erick,

    I am quite interested in hearing more about this Walmart business model. If you have time, can you tell me more about it?

    Thanks,
    Eric

  7. very good explanation eric. the costco business model is very interesting and i like how you compare it to online business.

  8. Hello Kate,

    Thank you! Do you have a Costco in your location? We can all learn from their business model and apply it to our internet marketing business model. (:

    Cheers,
    Eric

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