alt Hacker NewsCostco is the anti-Amazon
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Costco is an elegant solution for the suburbs, where everyone is driving around a vehicle large enough to store giant boxes off a pallet and bring them home. Here in NYC, it's really impractical to go to a warehouse and carry a month's worth of supplies home on the subway. The flip side is that the Amazon last mile deliveries are done on electric scooters that can bring a whole trailer worth of packages to the mailroom of a big apartment building. These have some other externalities (eg around traffic laws and sidewalk space) but they are on the whole a lot more resource-efficient than everyone driving around giant cars to go to the store.
The part about Costco choosing to avoid the last mile shipping problem reminded me of a proverb, roughly translated as:
A clever person solves a problem; a wise person avoids it.
I think it holds a lot of truth in engineering.
Whenever someone says America can do great things, I don't think of battleships, fighter jets, or AI models, I think of Costco.
The Costco buyers are all really quite good; whatever they are doing, they manage to fine really good suppliers for most things they carry in the store. The SoCal locations all carry really good mangoes when in season, rivaling one well known heirloom producer (Wong's...or maybe they buy from Wong's...). A local chef tried all sorts of strawberries from various farms for his line of ice cream, and concluded the Kirkland ones were the best bang for the buck...
All the comments appear to be US centric, but Costco is also in other countries. So to tell you about the UK:
Here membership is unusual in that it isn't technically open to everyone, it's business and certain professions: https://www.costco.co.uk/membership but in reality anyone who wants to join can find a way.
Also no mention in the article of non-food. In UK Costco is known for special offers on electrical and white good and more. And cheap car tyres iirc
In the UK not everyone drives like USA and Costco's are few and far between, so that limits who shops there. So a niche player compared to the Supermarkets for consumer shopping.
And people also have smaller homes compared to USA and smaller families maybe (or smaller portion sizes...!), and Costco here is more geared towards selling in bulk, and to corner shops and other small businesses. It's more of a hybrid Wholesaler.
Costco's is only a model that works in cultures used to having to drive to get groceries.
Having now lived a few years in the Netherlands, I much more prefer the ability to cycle/walk by one of the myriad of grocery stores in my day to day area and grab what I need for todays dinner.
My impression of Costco's selection is that it's the retail distillation of car-centric suburbs, despite it not being exclusively those people who shop there. The happy suburbanite cares about convenience and quantity above all else, from what I can tell anyway. They don't really have a varied sense of taste, they just want stuff, and they want easy access to that stuff. They like a "haul" that they do once a month, and buy vehicles that will fit it.
For me, I'll join a friend who has a membership from time to time, but I'll only get chicken breasts, a rotisserie, maybe frozen fruit if the price is competitive, and... soap; everything else is just noise and/or extra calories that I wouldn't have bought anywhere else but happens to fit in the industrial-size cart and usually isn't a substantially better price, or it's just not a good offering. I could buy greek Yogurt cups, but really I don't want that brand or the lemon or lime ones, so I'm paying marginally less to enjoy half of them. I could buy salsa, but unless it's a party, I have no need for a year's supply. It's just a lot and it's probably kind of agreeable. Also the blankets, they're alright.
The small selection of things I get are the few items—as the probably AI author suggests—that I'd either buy anyway in smaller quantities or just don't have opinions about. The one time I actually did have a membership, I'd find myself working backwards from it to justify to expense. I let Costco borrow my money and to get it back I'd need to exploit their good deals, but ultimately they just made a killing off of me filling my cart with arbitrary bullshit stuff.
> One brilliant feature of the Costco experience is, paradoxically, the constraint: as opposed to Amazon, with its near infinite assortment, or even Walmart, which has approximately 130,000 SKUs (stock keeping units, or distinct items) in the average Supercenter, any given Costco will only hold 4,000 SKUs to choose from.
I live in Spain now and over here we have Mercadona as a "low cost market" and they do basically the same thing - limited selection of mostly in-house brands.
At first I was stlightly annoyed by it but over time it turned out that it's kinda preferred way -- indeed I waste less time hunting for The Brand and just The Item I need. And most of the time quality is on pair (or better) while costing less…
This is about 80% spot on, but the last 20% fails to mention that you can avoid the in store experience if it isn't for you, and in fact get the stuff you want delivered to your door in a short period of time, using services like instacart. Costco even partners directly with instacart for same day delivery. You can use your membership to get same day delivery shopping on costco's website and they will use instacart to fulfill it for you. Or you can use instacart directly, in which case you don't even need a membership yourself.
We are probably fortunate, we live 5 minutes from one Costco, 6 minutes from a second one and 17 minutes from a third. My wife visits Costco every week, Walmart every week often on different days, etc. We buy from Amazon online frequently. Sometimes an item is cheaper at one place than another, comparison shopping, sometimes cheaper online, sometimes cheaper in the store.
It all works, though the article mentions public stores and references military commissaries as an example. We can shop at the commissary if we want. We don't because the other stores I mentioned above cover all our needs better at a better price point.
I do not think the article's author understands the subject matter as well as they think they do and with the many political references to the current New York mayor; it may just be disguised political messaging article.
Costco is mostly food, clothes, furniture, other large things, and auto services, which generally you don't get from Amazon even if you aren't a Costco member. The points about less choice more apply to like Costco vs grocery stores or Walmart. And I do like Costco, similar low-choice reason I like Trader Joe's even though Costco is its own league.
Highly recommend the Acquired podcast and their Costco episode if people want to dive deeper into the history of this company.
I understand the appeal, but let’s be honest. Costco is designed for rich people who think they are frugal. You drive your big SUV there to load up on months worth of food and goods, which you can only do because you have a big house with enough storage for all of it. And who cares if some of it goes bad because you can always go back for more and hey it was so cheap anyway. You even pay a membership for the privilege.
This post seems quite far fetched. Amazon is well aware of the paradox of choice, and the vast majority of UI changes I have seen recently are exactly those that guide and reinforce you to buy one option, without the decision paralysis. Items are not homogeneous, and it is obvious that they try to concentrate purchases to a smaller set of SKUs to reap the same benefits as Costco. It’s simply that Amazon can additionally support the long tail of SKUs with a heterogeneous warehouse system (and heterogeneous profit margins).
On the delivery side: US suburbia is just in general not a sustainable solution. Delivery is just one way in which it bites. Somewhere like NYC, the amortized delivery cost (internalized or externalized) is very low (and opposite to Costcos which require a drive to an inconvenient location).
The bit about agents doing your shopping is falling for the same trap as crypto people thinking NFTs will kill Ticketmaster. These have never been technical problems: the APIs don’t exist for nontechnical reasons.
I just realized that I use more different kind of stores and transportation to shop than ever. I walk for groceries, ride the motorbike to malls for monthly or yearly buys like clothing or light electronics, take the metro to specialized stores for heavier items and buy online hard-to-find or high-margin-elsewhere stuff. Also online buys are seldom delivered home, but to a nearby convenience store because work hours match delivery hours.
Thinking of changing this distribution is highly disturbing because of time wasted, much more limited options and huge price differences. Of course YMMV depending on location, Madrid here... the world the article describes is totally alien to me.
Amazon is the anti-Costco also. We thought about it, and it doesn't really make sense to get a Costco membership when we can lean into Prime more. It doesn't help that we live in a fairly urban area (Ballard in Seattle) and Costco's is pretty suburban.
I'd much rather order some heavy stuff from Amazon to have delivered and walk to the local grocery store for everything else.
Costco prices suck and I don't know why people clap for them.
I would love to hear more about Costco's engineering culture. The fact they are still running/modernizing/supporting AS400 infrastructure and RPGLE applications is remarkable. I have to imagine that they have a unique devops model internally to keep that alive; especially facing a dwindling talent market.
Costco is also an anti-Amazon in that they treat their workers and their suppliers well.
There's another reason for Costco's appeal and trust among members: Kirkland Signature. Costco mandates that any KS product must be at least 10% better in quality than the leading national brand it replaces and/or cost less.
That further helps simplify shopping and decision-making and resolves the paradox of choice. Instead of having to sort through a wide variety of unknown brands on Amazon, they just go with KS.
https://www.thestreet.com/retail/costco-reveals-why-kirkland...
Ok, let them both commoditize their complement.
It embodies the precise opposite of everything imagined by the e-commerce futurists
Costco do plenty of online only offers, partner with Doordash/Instacart, even sell holiday packages so I'm not sure how the author arrives at the conclusion they're at the "precise opposite of everything imagined by the e-commerce"
The only precise opposite is that they're still paying IBM goodness knows how much to stay on their AS/400 architecture.
I like the idea that Costco and Amazon are diametric opposites — for example I couldn't shop at Costco for a very very long time because I lived in the city and didn't have a car.
Amazon and other delivery companies (e.g. Weee) came to the rescue. For a while I lived close enough to a Costco for a 20 minute bike, so I'd load up my gym bag full of food - even then Costco is not ideal because there's only so much you can carry (one thing of meat, one thing of eggs, some veggies).
For those that think Costco are the uber-shopping experience are missing that they both provide very opposite consumer experiences. (Yes Costco has shipping, and same day shipping, but it hits different from Amazon).
This is also opposite to corner store grocery systems where you can pop in at any moment to get fresh fruit, a wider choice, smaller quantities at more flexible hours etc.
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tldr - what I think I'm saying is that Costco is the perfect "suburban" purchasing experience - great if you tick the boxes that you have a big family (otherwise why do you need a 60 pack of toilet paper), a big house (where do you fit all that toilet paper), a car (to transport the toilet paper), etc.
anyone who don't tick those boxes can't really take advantage of any of that - so while Costco is amazing, it definitely shouldn't be the only way to shop.
I dont like Costco, it epitomizes American over-consumption. Parking lot overflowing with oversized SUVs with people loading up oversized trolleys with food from food corporations to take back to their oversized fridges and storage basements.
I think the article misses discussing Costco’s growing online business. There are a ton of Costco items that you can only buy online or that are sold in a different way online, and they’re often doing so with included shipping very similar to Amazon’s business model.
The shipping is slower, but it’s an interesting part of their business, and I encourage Costco members to try it out. You’d be surprised at the quantity of things you really don’t need to go to the warehouse for.
I don't think anyone has mentioned the obvious middle ground: PO Boxes at USPS post offices. Nearly every town and city in the USA has a post office. Instead of driving packages to individual's homes or having businesses deliver to their specific warehouses, the middle ground is to deliver everything to the USPS offices.
If the stats in this are true, Amazon’s warehouse workforce turns over at 25 times the rate of Costco’s workforce, for almost the same wage. That is remarkable.
Has Amazon ever tried a curated, low-SKU section of the website? I guess that’s just the “Overall Pick.”
For that is a large appeal of Costco. If I need a blanket, I can visit a Costco and buy their softest blanket with no hesitation. It will be around $20. If it’s bad, they have the most generous return policy.
I like Amazon's service. Parking at Costco on a Saturday is absurd to the point there's memes about it. I really hate standing in lines. Delivery to my door is awesome and I'm willing to pay extra for it. I also see the Amazon truck going house-to-house and don't feel guilty: I'm just one more stop along the way, my marginal impact is nothing at this point.
Surprisingly Amazon is actually pretty constrained. There are usually only 3-10 versions of a given product but sold by hundreds of different resellers.
When I was shopping for a water distiller there was only one large one but branded for ten different Chinese companies. (And They all had the same dangerous flaw where water could spill on the electrical plug.)
Costco products have fallen off big time. Every time the long time staple items are New and Improved, they are materially worse (literally).
Forget Costco and Amazon it's all about Walmart. They are killing it with local from store delivery and they are more local then Costco. They will win at the end of the day.
Costco should aquire Hetzner :)
AWS enterprise VA-1 outage regularly secure DNS.
B. F. Skinner's Utopian Vision: Behind and Beyond Walden Two
They would be , in their own way, competing against "each other"? , with different models to get the product to customer .
nothing I buy on amazon is available at costo
this article sounds like a poorly AI written of a mashup of the https://www.acquired.fm/episodes/costco and CNN news article on the Mamdani bodega killing grocery store (which sounds super expensive for the value it provides)
I nodded along to much of the article, but I really think it's wrong to see this as a model for public grocery stores. The analysis is glossing over a lot of the key factors that Costco uses to make its logicstics model work. You can't buy small quantities, so the staff don't need to spend much time breaking down pallets; you're not allowed in the building without a membership, so there's little need to invest in behavior policing or loss prevention.
I'm surprised e-commerce is still under 17 percent.
It makes me want to check my purchasing habits to see if I'm around that mark.
Costco works hard to charge you less. Amazon works hard to charge you more.
I really don’t understand why people are so passionate about Costco. Every time I try to shop for items there, it is always cheaper elsewhere. Perhaps this is just Canada vs USA, but Canadians are extremely passionate about Costco too. A good example I saw recently was toilet paper. Their cheapest 30 pack was $30, when I can get basically the same product for $20 at Food Basics. But it’s not just one item, it’s every item in the store, there is always a better deal elsewhere. I honestly believe that people are suffering from mass delusion, and thinking they are getting a good deal “because bulk” without actually doing price comparisons. The only exception I’ve ever found for this was car tires.
Hate Costco. Buying from Amazon
> That said, there is no question that, in a better society than the one we have, key parts of Amazon’s operation would be retained for offering functions that contribute to the social good. The capacity to deliver prescription medicines same-day to the elderly is a genuine social contribution.
You know you're old when...
1920's-era "kid on bicycle" tech could do that. Ditto any healthy local social network. I do it occasionally for less-healthy family & friends.
Or - how many housebound elderly folks are already using DoorDash & similar?
Bigger picture, the best practice would be a dedicated service for this. Staffed by Nurse Aides, who interacted enough with their clients to notice developing problems early. Because compared to occasionally cycling old folks through the hospital - for "easily treated, if noticed sooner" conditions - that would probably have a negative cost.
Costcos tech stack is frankly unconscionably bad. It’s the one way in which Sam’s Club crushes them.
There’s no reason they couldn’t do basically all of the good things mentioned in this article plus have a functional website, let me scan and pay with my phone in store, have a handheld scanner at each register, etc.
I think Costco is good, but it's vastly overhyped. Comparing the two is just ridiculous. Having only 4,000 SKU's and thinking less choice is good is brainrotted. Costco shoppers are annoyingly conformist.
Costco is an exploitative mega-corporation and Amazon is too. Ask a Costco enthusiast and they will say they do it out of the goodness of their heart. It's really annoying and makes me completely avoid Costco. Please, tell me again how you think Costco hotdogs were invented by Jesus Christ and how you love guzzling down their wieners.
Oh man we went to Costco today to purchase a membership, was finally convinced after all of the $1.50 hot dog memes
It was a used car tier hard sell to get the “executive” membership, after saying no a half dozen times literally everything we said was an invite to highly recommended the damn executive card.
Then they offer $20 back on your membership if you sign up for auto pay (and install the costco app on your phone and give up your email and phone). But you need a card, and it can’t be Amex, Mastercard, or Discover, so of course the very highly recommendation is to get the Costco Visa. It has no annual fee and you get %2 back, and even if you don’t spend enough you'll get a minimum of $65 back, which is the difference between the regular card and the executive. So the executive card is basically a no brainer.
Well we couldn’t get the $20 back coupon and at this point im feeling like Costco isn’t as customer friendly as the internet says, but it turns out we can actually use discover (debit only) on the phone app. Even though honestly the executive card pays for itself, also the Costco visa has no annual fee you can just get it and never use it.
I ended up getting the plain gold star card, got some free samples and was thoroughly impressed with the $1.50 hot dog. But I think I hate this store, onboarding was such a shady process.
I admired Costco for installing USA-made manhole covers rather than use those made in India, which most municipalities have shifted to for lower cost.
I’m probably the only person who would notice that. Sort of how Steve Jobs explained that a good carpenter cares about the backside of the dresser as much as the front, even if no customer will ever notice.
> To put it crudely, having someone in a Sprinter van deliver a recently-purchased toothbrush to your doorstep is simply not a universalizable action, from either a business or logistical standpoint. It is a modern feat that Amazon is capable of doing this, but that it can be done does not mean that it should, nor even that it can be done writ large. For most consumption, it is far more efficient for people to handle the “last-mile delivery” themselves by going to stores and buying a good amount of stuff when they do so.
When you order your X, a van doesn't drive from Amazon's warehouse to your home and then back with only your order. The van takes a van-full (hopefully) from the warehouse, and makes many stops at many homes, businesses, etc.
That seems more efficient, in terms of fuel, climate impact, etc., than each customer making a separate round trip. Is there data showing it either way?
130+ iq move is to order daily stuff from amazon, and same day costco delivery when you need stuff in bulk
> Even if you think it is preferable at an individual level, there are good reasons to question the social value of the logistical complexity that it necessitates. Home delivery of single-packaged items entails an entirely different cost structure than freight trucks driving to consumer-facing warehouses delivering entire pallets of goods to be driven home by customers themselves.
Ok, so 100 people can all drive to the store, or one delivery truck can drive to everyone's house. (Ignoring the packaging waste for a second,) I suspect delivery of single items cuts back significantly on trips to the store.