Originally Posted by
Comicwoman
I doubt that they are that profitable to Costco. Low cost door to floor, but I would guess most of the purchase price ends up going to Hyatt.
Most of the
purchase price of almost everything Costco sells goes to the manufacturer/supplier. Costco only cares about
purchase priceto insure it allows them to set a
selling price that insures a higher value to their members than other retailers. Otherwise, why would anyone pay the membership and buy the increased quantities often needed? (6 cans of beans)
Costco has a "desired" profit margin they wish to make on items, which does vary from department to department.
Originally Posted by
toomanybooks
I don't think it's a given that Costco "ties up capital in inventory" on Hyatt certs - margin on grocery items can be much less than margin on gift items, for example.
Maybe they only pay Hyatt when a customer buys them. Maybe they get 45-day terms, in which case they are probably making a profit on the float.
My Costcos seems to be carrying more and more 80% certs all the time, even as the mix changes. Spas, hotels, restaurants, AMC movies, etc. I bet for the Christmas season they will carry more.
With current selling experience to Costco -
Terms vary - best scenario is, of course, that the item is
sold before the bill comes due. Our terms are 2% 30, net 31 - and better than 70% of what we ship them is sold in the individual warehouses before the bill comes due.
It may be that we (FT'ers) have a skewed idea of "selling well"... our item has
very limited customer appeal - and Costco buys over a million units a year.