Now I’m a huge fan of Costco as a consumer, but not for the business. The Costco model is great for groceries, but I think businesses are all about time and efficiency and Costco cannot provide this.
- Minimum Order Amount for free delivery
To get your free delivery (not guaranteed next-day), you have to spend a minimum of $250. If you cannot reach that threshold, it is a whopping $20 delivery fee.
- Product Selection
Costco is an opportunist in terms of how they stock product. Costco only offers fast-moving sku’s that can be sold in bulk quantity. Yes they can offer it at a fair rate, but they won’t necessarily have the specific item to fulfill your need. If you have a laser printer that isn’t a popular HP, chances are they don’t carry that cartridge. Any potential savings from buying from Costco would be undermined by soft-costs from having to purchase from multiple suppliers.
- $ Savings
Yes, Costco has aggressive pricing when you go into the store and compare the 30-40 items they have palletized in the aisle, but those aren’t the same products or prices you see when ordering online. As we all know, you can’t purchase all of your business needs in-store, nor does it make sense to take time from your busy day to travel to the store, wait in long lines, and lug heavy product. That’s not even factoring in liabilities associated with leaving your business to pick-up goods. Online pricing is setup differently as Costco Business Delivery is setup with a different distribution model and you the client are paying for the trucks, drivers, and deliveries. So let’s face it, in-store you might see paper for $29, but online you are spending $34.
- Rebates
People love their Costco checks, but do we realize that there is an annual $750 cap? That means a maximum redemption, on a best-case scenario, of $62.50/month. That doesn’t equate to 2% by any means and that’s only if you are an Executive member and pay the higher membership fees!
At the end of the day, we as buyers will do what makes the most sense for our business and our needs. Regardless of whom you decide to partner with for your business products, please be sure to dig deeper and uncover the costs of doing business with a particular vendor. Again, Costco is great for the consumer market, but service and even value are both missing from the equation for the Business Delivery model.
Michael Helou
mike@oxpros.com
