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A Different Kind of Warehouse

Costco’s Business Center Caters to SMBs

By Amber E. Watson

 

With the many challenges associated with successfully running a small business, the last thing owners and managers want to worry about is keeping up with supply needs and having enough money in the budget to cover these expenses. Luckily, large supply companies such as Costco offer small- to medium-sized businesses (SMBs) convenient, affordable options.

 

Costco operates an international chain of membership warehouses, mainly under the Costco Wholesale name, that are designed to help SMBs reduce costs in purchasing for resale and everyday business use. In addition, members purchase supplies and products for personal needs from Costco’s Web site, which features a convenient Business Delivery option.

 

Headquartered in Issaquah, WA, Costco Wholesale Corporation has 107,200 full- and part-time employees and approximately 600 warehouses in 433 locations across the U.S., as well as locations in other countries. Costco’s average warehouse size is 145,000 square feet.

 

Saving on Brands and Buying in Bulk
During challenging economic times, small businesses rely on convenient, affordable suppliers for office needs. Since opening its first warehouse in 1983, Costco’s mission has been to carry brand name merchandise at affordable prices. 

 

According to Jim Sinegal, CEO, Costco, “Costco offers lower prices and better values by eliminating virtually all the frills and costs historically associated with conventional wholesalers and retailers, including salespeople, fancy buildings, delivery, billing, and accounts receivable. We run a tight operation with extremely low overhead, which enables us to pass on savings to our members.”

 

One way for businesses to save is by purchasing Costco’s private label Kirkland Signature products, designed to be of equal or better quality than national brands. Kirkland products include water, food, coffee, housewares, appliances, paper products, and cleaning supplies.

 

Another way to save is to buy items in bulk. Instead of rapidly going through office supplies, paper products, and other items used quickly around the office, members have the option to purchase larger bulk packages that cost less per unit and last longer. This also cuts back on the amount of orders placed per year.

 

Buying in bulk may not be an optimal route for every small business, but for those with high supply needs, the option is worth evaluating.

 

Membership Levels
Costco offers three types of memberships—Business, Gold Star, and Executive. Different levels allow individuals and businesses to chose which program is the most cost effective for their needs.

 

Business members qualify by owning or operating a business, and pay an annual fee of $55 in the U.S. to shop for resale, business, and personal use. This fee includes a household card. Business members may purchase up to six additional membership cards for partners or associates in the company. Costco currently serves 6.3 million business memberships.

 

In addition to offering the aforementioned benefits, the Executive membership allows members to purchase a variety of discounted consumer services such as auto and homeowner insurance, mortgage, refinancing, high-yield savings accounts and CD’s, identity protection, personal check printing, and/or business services at reduced rates such as business phone services, merchant credit card processing, health and dental insurance, payroll services, business check and forms printing, small business 401(k) plans, and small business Web sites. Executive members also receive a two percent annual reward on most of warehouse purchases. They pay an annual fee of $110.

Costco Business Centers
Costco Business Center is a different warehouse designed to meet the needs of the SMB. It features thousands of items not carried at Costco or other warehouse clubs and is open to all Costco members. Many Business Centers also have an on-site print and copy center.

 

“More than 75 percent of the items in a Costco Business Center are unique—that is, not sold at Costco locations,” explains Patrick Callans, VP, Costco Business Centers. Items in the Business Centers are focused in categories specifically designed to serve small- and medium-sized offices, as well as convenience stores, and the restaurant/food service industry.

 

“Members shopping at Costco Business Centers find an expanded selection of office supplies, office furniture, and technology such as printers, faxes, scanners, and computer accessories. In addition, members have access to an even greater selection of office products through Costco’s Web site,” Callans adds.

 

Unlike traditional Costco warehouses, clothing, sporting goods, jewelry, and optical products are among the items not available at the Business Centers.

 

Members can shop in person at Costco Business Centers located in AZ, CA, NV, and WA. “Walk-in business constitutes about 65 percent of the sales through the Business Center,” states Callans. Items are also available for Business Delivery when orders are placed online, by phone, or via fax.

 

To get a sense of what is available through Costco Business Delivery, visit the Business Delivery section at www.costco.com, or pick up a catalog at one of the eight Costco Business Center locations. Printed catalogs may also be requested from the Web site.

 

“Costco members who shop at the Business Centers get most of the same benefits of members who shop at any Costco warehouse, including low Costco pricing, the two percent reward for Executive members, and the rebate available through use of the Costco/American Express co-branded credit card,” shares Callans. “In addition, each Costco Business Center conducts three week long events—referred to as Expos—during which special pricing is available on hundreds of items.”

 

A Commitment to the SMB
Carrying everything from paper towels to pens and electronics, Costco supplies its members with a range of affordable supplies under one big warehouse roof.

 

Special rewards for Business and Executive members, as well as the creation of the Business Center and Business Delivery option, prove that Costco is committed to serving the SMB.

 

 Click on the logo above to get more information on the vendors mentioned in this article.

 

Jan2012, Business TechEdge BTECO1201

 

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