Feasibility of Non Bulk Items at Costco – Part 1
Costco is the greatest wholesale mega store in today’s market opening its first store in 1983 in Seattle, Washington. Its mission statement is "Costco's mission is to continually provide our members with quality goods and services at the lowest possible prices. In order to achieve our mission we will conduct our business with the following Code of Ethics in mind: Obey the law, Take care of our members, Take care of our employees, and Respect our vendors. If we do these four things throughout our organization, then we will realize our ultimate goal, which is to reward our shareholders."
Today Costco has 622 stores worldwide with stores in Europe, Australia, Canada, Mexico, Taiwan, Japan, South Korea, and of course the United States. Costco’s trademark brand of sales of its product is in bulk. So it has only one or two choices of each item in each category because research has shown too many items in each category can confuse customers and they may not make a purchase. Feedback from customers has shown their chief complaint is not being able to buy more items individually.
The problem facing Costco these days is complaints by customers that they want some items sold individually because some customers don’t want to buy four bottles of ketchup at once. The research questions for Costco are will it provide items individually to customers, Is it profitable for Costco to sell some items individually, and how much business will not providing items individually to customers affect Costco’s revenues. This research is critical to Costco’s future and how it will change in the future to increase profits and maintain its current customers and also gain more customers that don’t shop at Costco because they are seeking a store that meets their needs of buying items individually.
An opportunity for Costco to continue to buy in bulk, but sell products individually instead of only having packaged deals is the hypotheses that will be tested. The idea can be further researched to examine if profits of Costco will rise when products can be bought individually packaged. Costco should continue to have great deals when a customer’s buy products in bulk, but should also have products individually packaged to help increase profits over time. After rigorously being tested, Costco will eventually see what type of impact the change may make. New customers will noticed the benefits of signing on and becoming a member of Costco. Increased sales and memberships will allow Costco to be more competitive in the market and could potentially be more lucrative then Wal-Mart.
For a hypothesis to be researched and tested there has to be different variables that make up the hypotheses. The independent variable would be for Costco decided to start selling items individually. The independent variable could cause many different dependent variables for Costco. Some may be higher profits, more members, and the ability to expand Costco throughout the United States.
From the costumers point of view providing individual packaged items while maintaining the 14-15% mark-up Costco is know to provide may not be possible anymore. In solution of that problem Costco has developed there own brand, Kirkland Products. An ethical consideration would be, does Costco offer only Kirkland products as non-bulk items or does Costco silicate other companies to sell non-bulk items to Costco at a price to maintain the low mark-up? Business ethics would tell management that select products may be available to the public with the normal mark-up but Kirkland product will be available to the public as well and most likely be the cheaper of the groups. Although Kirkland will have the price advantage and will be beneficial to Costco to promote business ethics are still on good terms. If Costco were to only sell...