How Costco Became A Highly Profitable Company, The Critical Success Factors Behind Costco’s Success As A Highly Profitable Retailer, Costco’s Growth Strategies For Long Term Revenue Growth, And The Future Outlook Of Costco In The Digital Era Ebook Tooltip Ebooks kunnen worden gelezen op uw computer en op daarvoor geschikte e-readers.

This essay sheds light on how Costco became a highly profitable company, identifies the critical success factors behind Costco’s success as a highly profitable retailer, demystifies Costco’s growth strategies for long term revenue growth, and reveals the future outlook of Costco in the digital era. Costco has become the fifth largest retailer in the world in 2020 and is slated to become more profitable in the coming years. Costco’s warehouse stores are able to double as sizeable retail stores since their product offerings are not only available for business owners to purchase who have a business membership at Costco, but are also available for customers to purchase who have a non-business membership at Costco. In the digital era, Costco has achieved the stupendous feat of earning well over $4,000,000,000 in net income annually. “Costco’s net income for the twelve months ending May 31, 2021 was $4,726,000,000, a 27.39% increase year-over-year. Costco’s revenue for the twelve months ending May 31, 2021 was $186.637,000,000, a 16.01% increase year-over-year”. Costco has been able to generate significantly more net income per store than Walmart. “Even though Walmart operates approximately 10,500 stores and clubs under 48 banners in 24 countries and electronic commerce websites”, “Walmart’s net income for the twelve months ending July 31, 2021 was $10,050,000,000”. Even though Costco currently has only 817 warehouses which is less than eight percent of the amount of stores and clubs that Walmart has, “Costco’s net income for the twelve months ending July 31, 2021 was $4,726,000,000” which is ultimately almost 48% the amount that Walmart’s net income was during the same time period from “the twelve months ending July 31, 2021”. Is is quite an extraordinary feat that Costco has enormous profit margins as a retailer. Costco “Wholesale's gross profit margin for fiscal years ending September 2017 to 2021 averaged 13.1%”. In spite of its enormous overhead costs as one of the world’s largest retailers, Costco is still able to operate highly profitably and has not over expanded unlike other retailers who have over expanded to the extent of cannibalizing its own sales. If Costco had as many stores as Walmart, then it would be apt to generate far more net income than Walmart. If Costco for instance could for instance earn an average net income of $5,878,109.45 per warehouse store and expanded to having 10,500 stores in order to have as many warehouse stores as Walmart has retail stores and clubs, then Costco would earn at least $617,201,492,250 in net income which indeed is a far cry from Walmart’s $10,050,000,000 in net income that was generate primarily from its stores and clubs “in twelve months ending July 31, 2021”. There is however no guarantee that Costco would be able to generate at least $617,201,492,250 in net income even if Costco had as many warehouse stores as Walmart has retail stores and clubs. While Costco stores may yield higher profit margins per store than Walmart stores, overly saturating the retail market by establishing stores everywhere could cause cannibalization of stores and culminate in the stores yielding significantly lower net profit margins or even becoming unprofitable if customer traffic is spread too thin as a result of a retailer over expanding. Costco does not cannibalize its market base since Costco warehouse stores are not located near one another. Walmart’s net profit margin per store is infinitesimal. “Walmart’s net profit margin as of July 31, 2021 is 1.78%”. “Costco’s net profit margin as of May 31, 2021 is 2.53%”. It is enigmatic if Costco would be able to reap significantly higher profit margins than Walmart if Costco profusely expanded its operations by launching as many warehouse stores as Walmart has retail stores and clubs. If Costco’s average net income per warehouse store for instance remained at least $5,878,109.45 per warehouse store, then Costco would need about 1,710 warehouse stores to generate as much net income as Walmart if Walmart’s net income remained at $10,050,000,000 primarily from earning product sales from 10,524 stores and clubs. Costco is so profitable that even just one of its warehouse stores can generate more net income than six Walmart stores can generate as an aggregate.