Costco's Unique Business Model

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Costco's Unique Business Model Case Study
Costco Wholesale Corporation's unique business model has given it a competitive advantage over other traditional discount retailers. Although it shares the same membership-only warehouse club model as other retailers in the industry, it has incorporated several strategies in its business model, enabling it to become a dominant player in the discount retail business. The first significant difference between Costco and other discount retailers is that it is the only company that does not accept manufacturer's coupons. The company argues that it negotiates with suppliers to ensure its customers get the best deals at the lowest prices (Costco Wholesalers, n.d.-b). Accepting coupons may increase prices as manufacturers often add the cost of a coupon to the original price. On the other hand, its main rivals, like BJ's Wholesale Club, accept manufacturers' coupons. 
Second, Costco offers a relatively different selection of goods from other discount retailers. Costco reduced its stock keeping units (SKUs) to around 4000 to concentrate more on quality than quantity (Costco Wholesalers, n.d.-a). Consequently, the company has healthier options than its competitors, including organic and less processed products. Its main rivals have a more comprehensive selection of products, but their healthier options are fewer than Costco's. Sam's Club, for instance, concentrates more on brand names under its flagship assortment of commodities referred to as Member's Mark (Sam's Club). Consequently, Sam's Club has fewer selections of healthy products in its stores.
Costco's fantastic performance over the years makes it clear that its unique business model is likely to be more successful in the coming years. The emergence of a healthy lifestyle trend among consumers pushes many towards natural and organic food. As the first mover in the health niche, Costco will likely enjoy a larger market share shortly than its competitors. Lieberman (2016) defines first-mover advantage as a firm's benefits from early entry into a new market. Since Costco offers the most comprehensive health products, it will likely attract more consumers than its rivals.
Moreover, as a significant player in the natural and organic niche, it is better placed to create strategic alliances with suppliers to offer the best prices in the market. Strategic alliances are partnerships that "occur when two or more firms agree to share costs, risks, and benefits associated with pursuing new business opportunities" (Kim, 2022). By forming strategic alliances with natural and organic food suppliers, Costco will enjoy the benefits of the alliance without bearing all the costs. Thus, Costco is likely to be more successful because it concentrates more on natural and organic foods which are growing in popularity every year.
Costco's Expansion Strategy Outside North America
Costco can compete successfully on a large scale out of Canada and the United States due to its innovative business model. The model guarantees all ...