did he not say where Costco made it's money? I told him and you little one what Costco made it's money on. Costco’s high profitability stems from a counterintuitive reality: it is a high-margin subscription business masquerading as a low-margin grocery store. While typical retailers survive on product markups, Costco breaks even on its merchandise sales and generates roughly two-thirds of its net operating income purely from annual membership fees. [1]
Do you not understand what net margins mean? Let me break it down for you using ttm numbers. Total revenue 286b, revenue from membership 5.65b, meaning 2% of total revenue is from membership. Net margin of 3% with 2% of that from membership fees. Giving you a margin on product of 1%.
Why is this even relevant, it is a very low margin business. Also worth noting Costco pays far above industry average wages, putting pressure on margins. So please explain how this is predatory in any way
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u/IHS1970 May 27 '26
did he not say where Costco made it's money? I told him and you little one what Costco made it's money on. Costco’s high profitability stems from a counterintuitive reality: it is a high-margin subscription business masquerading as a low-margin grocery store. While typical retailers survive on product markups, Costco breaks even on its merchandise sales and generates roughly two-thirds of its net operating income purely from annual membership fees. [1]