13 reasons Costco makes a lot of money

This helps create extreme loyalty and create habits.

For example, you can buy a case of 18 yogurts or a 2 lb bag of Macadamia nuts. It is challenging to directly compare to other stores, so you assume it is a bargain. It usually is.

Some manufacturers make products only available at Costco, like a particular color of popcorn popper, etc.

You can buy entire briskets (+/- 40 lbs) or beef ribs. Good for small restaurants or the home enthusiast. Because it is hard to find these items anywhere else, if you want one, you will go to Costco and do the rest of your shopping while you are there.

Cart size is an essential idea in retail. Whether they buy something for five dollars or buy something for $500 the additional cost of servicing the $500 order is fairly tiny. Everything around the customer experience, like having a cashier or keeping the lights on, is the same.

The entire ecosystem of bags does not exist. They don’t have to buy plastic bags or racks for them or have a nationwide bag manager.

Cash only means no 2% payments to the credit card companies: straight to the bottom line compared to supermarkets that take credit cards.

It also means fewer chargebacks and disputes.

it takes a long time to get through the store and you almost always leave with more than you came for

They don't need staff to constantly stock the shelves; they just put a pallet on the floor.

You can easily push 200 lbs around and this cart will not even look full.

Vendors usually pay for placements in the store. It keeps you in the store longer and looking around and you also buy more stuff.

Why go anywhere else?

If you want to get apples and eggs you basically have to walk through the entire store. EVERYBODY has to walk past the high-margin TVs and electronics at the entrance.