Case Study 2 | CostCo WholeSale | Financial and Competitive Forces Analysis | Taylor Lazenby
Since 1983, Costco Wholesale has risen to the top as the most proficient, efficient, and effective wholesale distributors in the world. By using a strategy based around ultra-low prices, a limited selection of nationally branded private labeled products, a treasure hunt shopping environment and operating with low operating costs, as well as geographic expansion, Costco has been able to distinguish itself from its competitors as the leading wholesale provider in the world.
While Costco is the leading wholesale provider in the world, it still has obstacles and barriers to navigate through as it continues
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Judging strictly from the numbers presented, it would appear that Costco, at the time being, holds a firm grasp on the majority of the wholesale market. It holds a solid advantage over Sam’s Club and a significant advantage over BJ’s as the leading warehouse distributor in the United States and Canada. All wholesale providers aim to offer bulk at a lower price. Costco has distinguished itself as the leader of all these by paving the way for wholesale providers. By offering between 3.600 to 4,000 quality brand name items, and by offering a wide range of products of all types, from food to furniture as well as beginning to offer ancillary departments for other needs, Costco has remained ahead of its competitors as the leading wholesale provider. The second and third strongest competitive force affecting Costco, is the potential that new entrants could break into the business and steal a market share away from wholesale distributors and providers offering substitute products. Wholesale providers like Costco don’t just compete against other wholesale providers; they also compete against retailers and discount operations such as Walmart or a Dollar Tree. With the growth of other online mass retailing operations like Amazon that offer low prices and free shipping on many items with a discount membership, it has grabbed a