What exactly is the Cost selling? What is it and what it does? Membership warehouses that offers their members low prices on a limited selection of nationally branded and selected private label products in a broad range of merchandise that they offer to a lower prices than the members can obtain elsewhere. They sell “sundries” (Candy, tobacco, alcohol “hardliner” (Electronic and health and beauty lines), Food, Softness, Fresh food, ancillary and other. Many of their consumable products are only offered for sale in case, carton or multiple-pack quantities.
The ancillary are businesses that Is In or next to the warehouse to extend the product and services to make the costumers more satisfied and to shop more frequently 2. Is Cost supplying, manufacturing, or retailing its product? Cost is an intermediate between the manufactures and the retailers, but is still a retailer that sells to the end user. Cost Is a sort of a retailer that buys most of their merchandise directly from manufactures and sells it in warehouses to members who are involved with some sort of business. Members can be business and individual with a evidence of business existence). Cost Is also offering services to their embers as gas stations, car washes, one-hour photo centers and so on. 3. Who is the end user of Costs product? Other businesses (828) but also individuals with a member card can shop at Cost warehouses for personal use. What does the business need? O Key activities/ capabilities- Cost has a great power to put pressure on the suppliers to lower the price as they buy huge volumes.
In that way Cost can sell their products to a lower price o Key resources Intellectual property (name, trademark, copyrights , patents, trade dress)adds value and Its one of the most important factors In Costs success. Important factor cause of the high competition In the retail business. Own warehouse* everything internally o Key partners Services as check printing services, auto and home insurance, online Investing do provide benefit for the members, Are generally provided by a third-part and vary by country and state. This service separate Cost from their competitors What does Cost offer? Value Proposition- tiny range – limit specific Items pallets and ranks- simple display – low prices o Performance- custom oriented – additional products, services, and warranty o 1 OFF Many of their consumable products are only offered for sale in case, carton or ultimate-pack quantities = for business o “Getting the Job done” – Car wash, insurance, check printing, food court* services to makes shopping and life easier for the customers, and encourage members to shop more frequently o Design brand/status- Important success factor o Price/ cost reduction Offer lower prices because of the high sales volumes and rapid inventory turnover.
That combined with the operation effectiveness by volume purchasing, effective distribution, reduced merchandise (self-service warehouse) creates a lower gross margin and Cost can therefore sell their products for a lower price. Just in time o Risk reduction Cost has a strong brand name and has members who pay to be able to buy there. Combined with a high member satisfaction that generally accepts return of merchandise, and a 90 days return policy, technical support, extended warranty on electronics. Accessibility Online shopping to provide their members a full accessibility with home delivery o Convenience/usability Who are Cost serving and how are they reaching and taking care of them? O Costumer segments Mass market- Segmented- Business and special members o Channels – Costumers can buy it in store or online Dedicated Personal assistance- provided by a third party (customer services) Self service- Key factor- self service lower the labor cost Automated services- membership, CRM Communities – magazines, coupons* keep members and attract new How are we financing the business? Cost structure o Business structures Cost driven (low cost) o Characteristics of cost structure Fixed costs- warehouses, labor Variable costs- depending on the ability to get low prices from suppliers.
