25 days ago
- Amazon and Costco represent two contrasting retail models: Amazon focuses on near-infinite assortment and ultra-fast home delivery, while Costco offers constrained selection and in-store shopping with low SKU counts.
- Costco's low SKU count enables faster inventory turnover, low overhead costs, higher wages for workers, low labor turnover, and a negative cash conversion cycle without pressuring suppliers.
- The logistical simplicity of Costco's model, including cross-docking pallets and minimal automation, is more efficient and socially beneficial than Amazon's complex delivery network, reducing infrastructure demands and environmental impact.
- New York City's public grocery initiative can learn from Costco by adopting low SKU counts, high-volume sales, central warehousing, supplier relationships, and loss leaders to keep prices low and overhead minimal.
- Historical context shows Costco's origins trace back to Fedco, a membership store for federal employees, highlighting the power of collective buying and public models for retail efficiency.