
Ask HN: Why does Costco not have an express lane at any of their stores? - GigabyteCoin
The CEO claims it&#x27;s because:<p>&gt;&quot;Costco’s ability to sell merchandise at incredibly low prices is based on adhering to various operating disciplines at every turn. Instead of having an express line—that often would be open but without a member in line—we have invested millions of dollars to speed up the entire front-end process. Our policy is “no more than one (member) in line and two (members waiting) behind.” The average completed front-end transaction is just over 1 minute.&quot; [0]<p>But I think he&#x27;s skirting the issue. I also think I know the answer but I&#x27;ll pose the question first before muddling anybody&#x27;s thoughts on the matter with my own.<p>[0] http:&#x2F;&#x2F;www.consumerreports.org&#x2F;cro&#x2F;magazine&#x2F;2014&#x2F;12&#x2F;q-a-with-costco-s-ceo-w-craig-jelinek&#x2F;index.htm
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maxharris
Costco is optimized to sell you stuff in _large_ quantities each time you
visit the store. They explicitly trade convenience (i.e., you can't buy a
single roll of paper towels there) for extremely low prices.

If you want a store that offers a nicer, more convenient shopping experience
(along with significantly higher prices), there are plenty of alternatives
available to you.

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thomaskcr
Costco really isn't a retailer in the traditional sense. If you look at how
they operate, aside from the fact that they allow the public to buy things,
they really operate as a distribution center. From where they build to what
they carry, it's not optimized to get the most customers because they know
they are profitable from membership fees alone.

Because of that, I think its silly to compare Costco to any other retailer in
any sense. If you never even walk through the door they've made money on you.
That strips away the need for a lot of things that other retailers need to do
to get you in the door.

They don't care if you get in and out fast for one item, their average cart
value is really high. If you know you'll need to wait anyway, you'll do all
your shopping there in a large trip and there is less "between order" time
spent for their cashiers (who aren't really cashiers but basically warehouse
packers, and you're the picker).

This extends to everything they do:

\- They don't need to carry less profitable products to get you in the door,
they optimize for least products and most profit

\- They pay more because these aren't store employees but a combination of
store and distribution center employee. This is supported by "market salary" a
bit if you compare walmart distribution center employees you'll see they're
actually higher paid starting salary, Costco employees fall on the upper end
of the area between walmart store employees and walmart distribution center
employees

\- They won't build places they can't get people to pay that membership fee.
The membership fee is a bit of a means test if you think about it. Poorer
people can't afford to buy in bulk even if it saves them money, if you can't
shell out the money for the right to shop at their store, then your average
cart receipt doesn't fit in with what they're looking for. They'd probably be
able to build profitable stores in a lot of places, but the membership fee
structure means less stores but very low risk. You know if your market can
afford to pay for somewhere to shop, they can afford what you're carrying. And
it doesn't matter at that point because you're already profitable anyway.

They really aren't a revenue optimized company, they don't care about a few
missed sales that you run to Acme instead of Costco because you only need one
thing and don't want to wait. That's exactly what they want - a nice big cart
every time you come.

~~~
lsiebert
You don't actually explain why you would pay a distribution center employee
more, but in any case I don't believe that's why.

Costco's employees get paid well because it reduces costs to hire and train
employees as well as pilferage.

Also, I'm not sure how it fits in, but there are radical differences in the
items between costcos just a few miles away, at least in the bay area. They
are more neighborhood oriented then you might think.

~~~
thomaskcr
Your second line answers the first, and also there is more to know.
Distribution employees are generally interacting directly with the ERP,
driving forklifts, handling the receiving process, etc. Managers handle a lot
of those things at the store level, that's not feasible at the distribution
level.

On your last line, my knowledge of what Costco carries comes from a CNBC doc -
so I'm not arguing that you're wrong, that's weird though because they made it
seem like they have the exact same product selection everywhere (except
produce/meats) and it's carefully curated. One example was the sizes of Motrin
they carry, they only carry one size (180).

~~~
lsiebert
If you are in the bay area, I'll happily give you the two I'm thinking of.

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jotux
I'm a serial low-volume costco shopper (<5 items) and don't really care if
they put in express lanes or not -- I just wish costco would go to the single-
queue model for checkout.

~~~
DiabloD3
I wish a LOT of places had this, it really shortens how long I'm standing in
the line, and it also vastly increases the efficiency of the operation.

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GigabyteCoin
Ok I'll give my 2 cents now, thanks for all of your answers everyone.

Imho they're purposely incoveniencing small-time shoppers, in an effort to
increase each shopper's purchase amount.

If you're constantly met with 5-10 minute wait times at the checkout, you're
going to make sure that it's worth it (by buying a lot of items).

They probably see multiple efficiencies by customers purchasing 20+ items at
once and wish to keep it that way.

With 20 or more checkout lines in most stores, I can't really justify why they
wouldn't dedicate at least one to 10 items or less.

I thought about this the other day when I was contemplating going in just to
get a tub of baking soda. I didn't pull the trigger. I'll go back when I have
at least 10 or 20 things I really need to stock up on.

I agree with jotux though, a single queue would really be the best of both
worlds imho. They get their efficiences with the big buyers, and everybody
gets through the line at the same (faster) rate.

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pm24601
A random point to also be aware of: Costco makes practically no money off of
what they sell. Costco makes their money from membership fees.

Because membership fees are so important, Costco has to listen to the members
so I would hazard a guess that members have not asked in sufficient numbers.

~~~
gesman
Some items might even be at a loss for Costco ($1.99 for pack of 36 water
bottles?) but overall I think it's not zero margin enterprise.

Some items or services are definitely carrying healthy profit and behind the
scenes kickbacks from the vendor (small business payment systems, other
recurring services sold to customers, very large price ticket items like
furniture and cars)

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barefootford
When I worked there I was told that the average checkout was something like
7-8 big items, so almost everyone would checkout in the 'express' (10 items or
less) lane if they had one.

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NeutronBoy
At least from what I've seen in the Costco stores in Australia, it's because a
Costco 'express lane' would need a cutoff of about 30 items to make it useful.
People go to regular supermarkets if they need something quickly, and they go
to Costco do to their weekly/monthly shopping.

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jason_slack
How many items would qualify you for an express checkout? Local supermarkets
are maybe < 10 to < 20.

I never make it out of a Costco with < 20 items usually. I usually stock up
for a month resulting in a $300-$400 purchase.

I do see people with 1-5 items sometimes. I let them go ahead of me.

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mchannon
Not that they're identical, but some Sam's Clubs are now sporting self-
checkout lanes.

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douche
So what service does Sam's Club offer now? From what I remember, checking out
was a pseudo-dystopian experience anyway, with having to rummage in a big bin
for recycled packing boxes to bag your items in yourself, then having someone
give you the hairy eyeball on the way out as they looked over the receipt and
your haphazardly packed boxes of groceries.

I guess there's always the free cocktail weenies...

~~~
JoeAltmaier
Yeah the whole experience was slimy. I just went through your checkout; why
are you inspecting my cart? In fact, what gives them the right to rummage
through my stuff at all?

