Exactly. Costco gross profit margin is 13% compared to Walmart (not Sam’s Club) is around 24%.
By charging a membership fee you recoup some of that lost margin and encourage repeat business as customers look to recoup their membership fees through membership rewards.
jzabkowicz t1_j9ze8lf wrote
Reply to comment by TehWildMan_ in ELI5:Why does Costco restrict memberships to certain people? by MikeTorsson
Exactly. Costco gross profit margin is 13% compared to Walmart (not Sam’s Club) is around 24%.
By charging a membership fee you recoup some of that lost margin and encourage repeat business as customers look to recoup their membership fees through membership rewards.