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Costco – The Anti Wal-Mart

Excelelnt article in MSN Money about Costco and their rise to the top. Most of their revenue is made from memberships which is due mostly in part to their 1% profit margin. They have very strict rules about how much they mark up merchandise and will drastically cut prices if they receive a discount from the distributor.

As a matter of corporate policy, Costco refuses to mark up any product by more than 15% above its cost. When the company signed a new contract in 2005 with a supplier for Brooks Bros.-style men’s cotton and button-down shirts, and got a significant price reduction for a massive two-year order, it immediately cut the price of the shirts to $12.99 from $17.99, notes Richard Galanti, Costco’s chief financial officer. Other retailers might have phased in the reduction and captured added profit, but that’s not the Costco way. The shirts now cost $14.99 because they are made with better-quality cotton.

Read the article to learn more about Costco, their excellent property acquisition, commitment to customers and their employees, and overall “good citizen” way of thinking that starts all the way on top with the founders, James Sinegal and Jefferey Brotman.  It’s no wonder that Costco is one of my favorite companies.

| Read more at MSN Money |

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