How Costco REALLY Makes Money

This is the world's third largest retailer, — beaten only by Walmart and Amazon, but with a profit margin of only 12%, which is half of their competitors. How are they making money? — Well, I'm here to find out. — You can't even walk in without a membership, which costs $65. And then you're greeted with a maze-like layout, concrete floors, no music, and boxes everywhere. This just shouldn't work. But 90% of members renew every single year. Their private label, Kirkland, drives a third of all sales because it undercuts name brands. They limit their selection to just 4,000 products compared to 30,000 at other stores, which means massive bold quarters and brutal negotiating power. So they squeeze suppliers, keep costs low, and pass the savings on to