From zero to $3 billion in six years.
The business model is deceptively simple. Keep costs low and pass the savings onto members. Since 1983, Costco has been offering brand name merchandise to businesses and individuals at substantially lower prices to members. It’s been a strategy that has been duplicated, but never quite equaled.
Though Costco Wholesale Corporation began in Seattle in 1983, their roots stretch back to 1976. That was the year Price Club opened their first warehouse store in an old airplane hangar in San Diego. It was originally open only to businesses, but company executives soon figured out that extending shopping to individuals could get them even more buying power.
How does that fit into the Costco story? Well, fast forward for a moment to 1993. That’s the year Costco and The Price Company merged. Six years later, the company completed its reorganization, creating Costco Wholesale Corporation, a Washington State company based in Issaquah. The company is traded on NASDAQ under the ‘COST’ symbol.
The company is truly a Washington success story and one of our business legends with an international reach. It is the first company ever to grow from zero to $3 billion as quickly as it did. By 1993, the company had 206 locations with $16 billion in annual sales. As of the end of 2011, the Costco had grown to 592 warehouses in the U.S. and Puerto Rico, Canada, Mexico, United Kingdom, Taiwan, Korea, Japan and Australia. Today, sales are in the neighborhood of $64 billion and climbing and the company employs approximately 155,000 people.
What’s the secret to their success, besides $5 roasted chickens and $1.50 for a hot dog and a soda? According to the company’s co-founder and director, it’s the ability to keep costs low, eliminating frills such as fancy buildings and salespeople, keeping overhead low and maintaining business and individual membership levels that the company can leverage into remarkable buying power.
Learn more about Costco.
And if you’re keeping score, the company sells approximately 30 million rotisserie chickens and 100 million hot dogs a year.