The company has the weakness of the limited array of goods and services.

Non-member consumers might feel unwelcome at Costco stores. This model encourages customers to buy at Costco stores, but also limits the total number of customers. Costco’s main weakness is the membership-only warehouse club retail business model.Variable costs are lower when volumes are higher.Įven though Costco is profitable and one of the largest retailers, the business suffers from the following weaknesses: Higher operating efficiency is achieved through minimization of variable costs. The high sales volume contributes to high operating efficiency.The high sales volume ensures high revenues in spite of low selling prices. Costco has rapid inventory turnover combined with high sales volume, contributing to higher revenues.The company has very attractive low prices on practically every good or service offered in its stores and on its website.The company’s success capitalizes on the main strengths of the business, as follows: Main article: Costco Wholesale SWOT Analysis Costco’s Strengths (Internal Forces) The generic strategy of cost leadership also agrees with and is needed to sustain Costco’s business model. In fact, this business model aligns with the company’s mission. The company’s business model is a core factor that enables Costco to follow its mission. Costco’s strategy also combines the membership warehouse club business model to differentiate it from other retail firms. Retail giants like Walmart also use the cost leadership strategy. This strategy entails maintaining the lowest prices possible. Costco’s generic strategy is cost leadership.

Competitors Sam’s Club and BJ’s Wholesale Club also use the same business model. However, non-members can use Costco Cash Cards to shop at the company’s stores.

Non-members may accompany members, but only members are allowed to purchase in these stores. In this model, consumers pay a membership fee to access the low-cost products available at Costco stores. Costco uses a membership-only warehouse club business model.

Business modelling tools market 2016