Costco Wholesale
Costco Wholesale
Since 1983, Costco Wholesale has risen to the top as the most proficient, efficient, and effective wholesale distributors in the world. By using a strategy based around ultra-low prices, a limited selection of nationally branded private labeled products, a treasure hunt shopping environment and operating with low operating costs, as well as geographic expansion, Costco has been able to distinguish itself from its competitors as the leading wholesale provider in the world.
While Costco is the leading wholesale provider in the world, it still has obstacles and barriers to navigate through as it continues to sustain its operations. To summarize some of these challenges and to determine which of the challenges is the strongest and why, the 5 competitive forces model will be used.
The 5 competitive forces model holds that competitive pressures on companies within an industry come from 5 different sources. These include:
1. Competition from rival sellers
2. Competition from potential new entrants
3. Competition from producers of substitute products
4. Supplier bargaining power
5. Customer bargaining power
Most often, the strongest of the 5 competitive forces is often the competitive pressures created by the rivalry among competing sellers. This remains true in this case with Costco Wholesale as well. The wholesale segment of retailing in North America as a whole produced over $155 billion in 2011 alone, and it was growing at a rate of 15-20 percent faster than retailing as a whole. The three competitors that dominate the wholesale market are Costco Wholesale, Sam’s Club ( the wholesale division of Walmart), and BJs Wholesale club. As of 2011 there were nearly 1,400 wholesale warehouses across the United States and Canada. Most major metropolitan areas had at least one to choose from. Costco Wholesale had around 57 percent of those warehouse distribution centers, Sam’s Club had around 35 percent and BJs and other small wholesale providers made up
Since 1983, Costco Wholesale has risen to the top as the most proficient, efficient, and effective wholesale distributors in the world. By using a strategy based around ultra-low prices, a limited selection of nationally branded private labeled products, a treasure hunt shopping environment and operating with low operating costs, as well as geographic expansion, Costco has been able to distinguish itself from its competitors as the leading wholesale provider in the world.
While Costco is the leading wholesale provider in the world, it still has obstacles and barriers to navigate through as it continues to sustain its operations. To summarize some of these challenges and to determine which of the challenges is the strongest and why, the 5 competitive forces model will be used.
The 5 competitive forces model holds that competitive pressures on companies within an industry come from 5 different sources. These include:
1. Competition from rival sellers
2. Competition from potential new entrants
3. Competition from producers of substitute products
4. Supplier bargaining power
5. Customer bargaining power
Most often, the strongest of the 5 competitive forces is often the competitive pressures created by the rivalry among competing sellers. This remains true in this case with Costco Wholesale as well. The wholesale segment of retailing in North America as a whole produced over $155 billion in 2011 alone, and it was growing at a rate of 15-20 percent faster than retailing as a whole. The three competitors that dominate the wholesale market are Costco Wholesale, Sam’s Club ( the wholesale division of Walmart), and BJs Wholesale club. As of 2011 there were nearly 1,400 wholesale warehouses across the United States and Canada. Most major metropolitan areas had at least one to choose from. Costco Wholesale had around 57 percent of those warehouse distribution centers, Sam’s Club had around 35 percent and BJs and other small wholesale providers made up