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  • This video is sponsored by Brilliant.

  • The first 200 to use the link in the description get 20% off the annual subscription.

  • Every October, thousands of dead strip malls, Blockbusters, and Radioshacks crawl out of

  • their graves and spring to life with orange signs.

  • While Halloween spending has steadily grown in recent years, the number of pop-up stores

  • has absolutely exploded.

  • Companies like Party City and Spirit Halloween have no trouble finding empty 50, 60,000 square-foot

  • buildings in the middle of town.

  • For that, they have to thank the so-called Retail Apocalypse.

  • In the last three years alone, Sears lost 142 of its stores, Toys-R-Us filed for bankruptcy,

  • J.C. Penney lost about 200, Payless ShoeSource closed all 2,000, and RadioShack, about a

  • thousand.

  • The obvious question is Why? and the obvious answer is Amazon.

  • But not exactly.

  • It's not retail stores that are dying.

  • All these brands have something in common: they suck - usually because they failed to

  • adapt.

  • Sears tried to do everything and ended up doing everythingterribly,

  • J.C. Penney forgot its customers,

  • and Toys-R-Us thought the internet was a fad.

  • Millennials didn't “killyour business, they stopped putting up with its 18th-century

  • practices.

  • Other companies are thriving, like Ross, Lush, Aldi and Dollar General.

  • One, specifically, Costco - succeeds against all odds not by copying Amazon but doing almost

  • the opposite.

  • While both sell just about everything - from food, to tires, vacations, and lawnmowers,

  • Costco's strategy could hardly be more different, and that's exactly why Amazon should be

  • paying attention.

  • Most grocery stores - cheap, premium, big, and small - have the same basic strategy.

  • They know everyone buys milk, eggs, bread, and bananas, and almost everyone knows what

  • they cost.

  • So they lure customers in with cheap prices for these staples, even at a loss, and then

  • profit from their large volume, repeat business.

  • Costco is no different, with its five dollar rotisserie chicken and bargain gas stations,

  • which usually attract long lines.

  • But unlike almost all of its competitors, Costco's deals aren't aimed at the general

  • public.

  • While the average grocery store does anything to get you in the door, Costco charges you.

  • You won't even be allowed inside without a membership, which starts at $60 a year,

  • or $120 for Gold Star Executive.

  • This, like Amazon Prime, triggers a sunk-cost fallacy.

  • Once you've already paid the 60, $120, you feel invested - why shop around when you already

  • have Prime?

  • By not using it, you think, you're just wasting money.

  • Soon, you stop comparing prices and automatically go to Amazon.

  • But what's really genius about Costco's membership is that it's mandatory.

  • Amazon users will self-sort - each individually calculating whether buying Prime will save

  • them enough money to be worth it.

  • This does create loyalty but doesn't fundamentally change the company's business model.

  • Costco, on the other hand, makes 75% of its money from membership fees.

  • Membership isn't its loyalty program.

  • Membership is its business model.

  • In 2018, Costco had 94 million members, a little less than Prime's 100 million, despite

  • having only 700 stores around the world.

  • That's significantly more than cheaper, digital subscriptions like Apple's Music's

  • 60 million or Hulu's 25, and yet 90% renew each year.

  • Why?

  • Because its prices are so, ridiculously low.

  • Not because it's a charity or makes money from more expensive items while you're already

  • there, but because it's incentives are aligned with yours.

  • Its first priority is getting its customers to renew their membership - which means impressing

  • them time after time with low prices and high quality.

  • Raising prices would only generate a few cents today and cost the company $60 next year.

  • That's why it has a self-imposed rule: No item can be marked up more than 15%, or 14%

  • for branded items, giving it an overall average markup of 11%, far lower than Walmart's

  • 24%, 30 across all supermarkets, or Home Depot's 35.

  • Almost everything about its stores is designed to accomplish this goal.

  • True to its name, Costco stores are, in every sense of the word, warehouses - there is no

  • back-room”.

  • Instead, forklifts move pallets of products directly onto store shelves.

  • There are no fancy decorations and aisles deliberately feel crowded - basically the

  • opposite of an Apple store.

  • But for as big as its warehouses are, their selection is surprisingly sparse.

  • Your neighborhood supermarket will sell, on average, about 30,000 unique items, a Walmart

  • Supercenter, 140,000, but Costco, only about 4,000.

  • Many of its stores have a gas station, pharmacy, hearing aid center, optometrist, photo processing

  • center, tire garage, liquor store, and food court, but for eachkindof item, there

  • will usually be only one or two choices.

  • Rather than paralyzing shoppers with an endless row of similar brands, Costco offers large

  • quantities of whatever it considers the highest quality.

  • Not only does this make shopping and stocking shelves simpler, but it gives Costco immense

  • buying power, and by extension, immense negotiating leverage with its suppliers.

  • Companies want so badly to be the one or two choices at Costco, they'll lower prices

  • and work to adapt their product to its needs.

  • At one point, for example, Costco reengineered a container of cashews so it could fit more

  • in the same space, ultimately saving 24,000 pallets a year - money it passed onto the

  • customer.

  • If Costco is unsatisfied with a product, it just creates its own.

  • Its store brand, Kirkland Signature, accounts for about 25% of its annual sales and has

  • a reputation for being high quality.

  • The other major ingredient to Costco's success is the way it encourages high spending.

  • Because getting around the store is so confusing, you have no choice but to wander through most

  • of the aisles.

  • The large quantities attract business owners, who makeup just over one third of its total

  • members, but account for two-thirds of its sales.

  • The $60 up-front fee, meanwhile, selects for an affluent demographic, with an average household

  • income of nearly $100,000.

  • And that's the genius of Costco: it turns nearly every seeming obstacle into a competitive

  • advantage.

  • Its membership fee should make acquiring new customers fatally difficult.

  • Instead, it creates loyal, deep-pocketed patrons who praise the company for its free samples,

  • generous return policy, and, of course, low prices.

  • Its cost-saving warehouse layout should confuse and annoy shoppers.

  • Instead, it makes them feel like deal-hunters, much the same way IKEA's do-it-yourself

  • model makes its customers proud of their work.

  • It's a winning formula that's now being exported to 13 countries, including, as of

  • this year, China.

  • Its grand opening in Shanghai was so busy that the store had to temporarily close for

  • safety.

  • Ultimately, Costco will never be as big or exciting as Amazon, and that's largely why

  • it's so adored.

  • Shareholders love it as a solid low-risk, predictable long-term investment.

  • And its customers can feel good about its low prices knowing they don't come at the

  • expense of workers.

  • While Amazon ruthlessly sacrifices everything for lower prices, Costco sees its employees

  • as a crucial ingredient to its success.

  • The average wage of all 245,000 workers is $21 an hour, double the U.S. retail average.

  • It also gives better health insurance and retirement benefits, which Costco is rewarded

  • for with employees three times more productive.

  • In an era of overvalued startups, reckless desire for growth, and questionable business

  • practices, Costco is something else entirely: refreshingly boring.

  • As companies like Walmart and Costco rush to compete in e-commerce, there's never

  • been a better time, career-wise, to learn programming.

  • Brilliant will take you from the fundamentals all the way through the most advanced concepts

  • like machine learning, quantum computing, and everything in between.

  • Brilliant helps you really understand science, math, and Computer Science with interactive

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  • You can use the link in the description to start learning whatever interests you most

  • for free, and the first 200 people will get 20% off the annual premium subscription, so

  • you can view all Daily Challenges and unlock dozens of problem-solving courses.

  • Thanks to Brilliant and to you for watching this video.

This video is sponsored by Brilliant.

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B1 中級

コストコがAmazonよりも安い理由 (Why Costco is Cheaper than Amazon)

  • 121 3
    王語萱   に公開 2021 年 01 月 14 日
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