1970s
The $1.50 hot dog and soda combo began at Price Club after Hebrew National agreed to supply hot dogs and carts.
“the Costco $1.50 hot dog and soda deal is born.”
Topic
Costco
27 facts from 7 episodes, in date order. These are what speakers said on the shows, each linked to the moment it was said. They aren't independently verified.
1983
Costco was founded in Seattle in 1983 by Jim Sinegal and Jeffrey Brotman.
“Costco was founded, as many people know, in Seattle, lovely city of Seattle, in 1983 by retail veterans Jim Sinegal and Jeffrey Brotman.”
1983
Jim Sinegal and the Brotmans raised $7.5 million for Costco by selling 50% of the company.
“He and the Brotmans raise $7.5 million to get going. Yep. They sell 50% of the company to do that.”
1993
Costco and Price Club merged in June 1993 to form PriceCostco.
“So in June 1993, Costco and Price Club merged together to form the united Price-Costco.”
1993
In the 1993 merger, Costco shareholders received 52% of the combined company and Price Club shareholders 48%.
“At the transaction, 52% of the equity in the combined company goes to Costco shareholders, 48% to Price Club shareholders.”
1995
The hosts say IKEA began selling hot dogs in its stores in 1995, copying Costco, and Kamprad later used "hot dog products" as a name for extremely cheap items.
“Because in 1995, they copied Costco and they start selling hot dogs in the stores.”
1998
Costco's Executive Membership, launched in 1998, costs $120 versus $60 and gives 2% cash back capped around $1,000.
“So you can spend an extra $60, so total of $120 instead of $60. And what you get for that is 2% cash back on your transactions.”
2019
Costco's first China store opened in 2019 and reached about 400,000 members within two years, versus about 68,000 at an average US store.
“The first store in China opened in 2019, which popped to 400,000 members within two years.”
2023
A Lightspeed venture capitalist told a host that after the Costco episode, he received three startup pitches in one week comparing themselves to Costco.
“Dude, I have gotten three pitches this week from startups where at some point in the deck, they talk about how their business model is similar to Costco.”
2023
Costco earns about $1,800 in revenue per square foot, versus roughly $600 at Walmart and $450 at Target.
“Target's about $450 per square foot of revenue. Walmart's about $600. Costco is $1,800 per square foot of revenue.”
2023
Costco sells about 500 million chickens a year, including about 130 million rotisserie chickens.
“They sell 500 million chickens a year. Not pounds. Chickens.”
Undated
Daniel Ek recalls that Lil Wayne sold about 3 million albums through Costco in one year of the CD era.
“I remember, I think it was Lil Wayne that sold like 3 million albums in that year on Costco out of all places.”
Undated
Costco CEO Jim Sinegal asked Warren Buffett to join Costco's board, and Buffett suggested Charlie Munger instead.
“Well, Senegal asked Warren to become a director of Costco. He was looking for somebody with a financial reputation.”
Undated
Charlie Munger noted that Costco's parking spaces were 10 feet wide, wider than the roughly 8-foot-9 norm.
“all the parking spaces were 10 feet wide instead of 8 feet 9 or whatever they normally are.”
Undated
Charlie Munger said Walmart failed to copy Costco successfully because it was too attached to its existing ideas.
“They were too wedded by the ideas they already had. That's everybody's trouble.”
Undated
Charlie Munger said Costco focused on good locations in wealthy suburbs, which Walmart avoided because of the cost.
“And Costco just specialized in the good locations where the rich people live.”
Undated
Charlie Munger said Costco grows around 10% a year because opening many stores quickly is hard.
“It is hard to open too many stores a year. New store, new manager, new this, new politics, new it.”
Undated
Charlie Munger said Costco's first attempt to open in China was met with a $30,000 bribe demand, which Costco refused.
“The first store they tried to open in China, the first store somebody wanted a $30,000 bribe.”
Undated
Schultz says selling Starbucks beans in Costco measurably increased traffic at nearby Starbucks stores on Seattle's east side.
“In fact, putting Starbucks in Costco, we were able to measure directly the increase in volume in the stores on the east side as a result of the proximity to the Costco store.”
Undated
Costco's roughly 4,000 products, versus 100,000 to 200,000 at Walmart, make it a meaningful customer to each of its vendors.
“If you only sell 4,000 things, it doesn't take a lot of volume before very quickly you are a meaningful seller to every single one of those vendors.”
Undated
Costco sells through its inventory in about 27 days on average, so vendors are effectively financing inventory because payment terms are net 30.
“On average, it takes them 27 days to sell through their entire inventory, which means that's on net 30 terms”
Undated
Costco turns its inventory about 12.4 times a year, versus about 8 for Walmart and 5 for Home Depot, according to Ben Gilbert.
“So Costco actually turns their inventory 12.4 times per year.”
Undated
Costco caps markups at 14% above supplier cost, with Kirkland Signature allowed up to 15%.
“they have decided internally that they are not allowed to mark up anything more than 14% above what the suppliers sell it to them for.”
Undated
About 92% of Costco's merchandise is cross-docked, versus about 10% at Walmart, according to the hosts.
“92% of Costco's merchandise is cross-stocked. Only 10% of Walmart has cross-stocked merchandise on a pallet system like this.”
Undated
Executive members are 45% of paid Costco members worldwide but account for 73% of sales.
“Interestingly, 45% of paid members worldwide are executive members, but those members represent 73% of sales.”
Undated
About 93% of Costco members in the US renew each year.
“93% of members in the U.S. renew every single year.”
Undated
Costco built its own chicken processing plant in Fremont, Nebraska, working with about 150 local farmers.
“build their own fully owned facility in Fremont, Nebraska, outside of Omaha, and build relationships with 150 local farmers in the surrounding area.”
Episodes