Apple and Costco Officially Parting Ways

[betomax]

Everyone who doesn't know what they are talking about re: retailing and marketing: shut it.

The posters mentioning that Costco has differentiation by product quality, return policy and lastly cost are totally right. They have a target, which they achieve, of a higher end consumer, with more disposable income. Specifically, than Sam's (and there were other, mostly regional cost clubs when they started).

This is well-known in business and marketing circles. Look it up.

What do we mean by quality? That the Costco buyers pick stuff that meets their target audience. Then the supplier has to sign a contract that the products delivered will continue to meet the quality of the samples. First few years I shopped there, products were a lot more transient, because (and aside from Business Week interviews, I've talked to a Costco buyer) suppliers would slip, or try to pull one over. That only works at Walmart/Sams, and Costco would happily drop them.

The return policy is not just to satisfy customers, but a way of /judging/ customer satisfaction. They log why the product was returned, and look at the results, I believe, twice a week. If there's a regular problem with a product, they fix it.

Apple, by dropping them, is missing out on this high customer-service model, and an audience that buys a surprising number of $800 items essentially on whim. Costco will not notice one whit, which is why they have the ability, during negotiations, to walk away when someone won't meet their basic markup, quality and return policies.

I typed in a lengthy, well reasoned, and organized post (which was lost due to some sort of login error) which offered support for this argument. It featured two specific examples of basically unresearched purchases of items exceeding $200 and how I can do this with confidence at Costco and cannot anywhere else. It also detailed my experience with Costco and Sam's club over the last 11 years; well, actually, I was a Sam's club member for just 1 year as it turned out that Sam's is much more like Walmart than it is like Costco in the ways which are most important to me despite Sam's being much more conveniently located. Finally I indicated that I bought 2 iPods from Costco and lamented that others, like me, who don't enjoy shopping, would probably just as well buy whatever else Costco stocks based on confidence with Costco's other stocked items (never regret purchases at Costco) and that going to other stores is inconvenient, and oh, do you want to buy an extended warrantee with that toaster?

Anyways, it is remarkable that Costco is the only store where I feel I can spend a load of money (on a whim, well said!) and be confident that I got a good deal and will be satisfied with my purchase. Everywhere else I check for deals and research, research, research.

Even with Apple I check for bargains. This basically means wait for new releases & use the EPP store. Or catch Black Friday sales.

 

[JAT]

Well, that's awful. I mean, that's like a free rental service. I never understood how Costco survives with people doing that all the time.

Because "people" didn't do that all the time. Only ********s.

Nice job generalizing an entire population.

I'm trying to figure out if this was a positive or negative comment. Or if you are just defining "statistical analysis".

 

[harrier]

Will Miss the iTunes Gift Card Discount

This explains why I wasn't able to find iTunes cards in my local Costco in the last couple of weeks. Too bad -- I appreciated the discount -- $60 in gift cards for something like $56.

 

[AidenShaw]

...my uncle gave me his membership card so I get in for free.

You don't get in "for free", your uncle pays for your membership.

Or do you mean that you use his membership card - which could be a problem since at least our Costco cards have our photographs on them.

 

[aloshka]

Everyone who doesn't know what they are talking about re: retailing and marketing: shut it.

The posters mentioning that Costco has differentiation by product quality, return policy and lastly cost are totally right. They have a target, which they achieve, of a higher end consumer, with more disposable income. Specifically, than Sam's (and there were other, mostly regional cost clubs when they started).

This is well-known in business and marketing circles. Look it up.

What do we mean by quality? That the Costco buyers pick stuff that meets their target audience. Then the supplier has to sign a contract that the products delivered will continue to meet the quality of the samples. First few years I shopped there, products were a lot more transient, because (and aside from Business Week interviews, I've talked to a Costco buyer) suppliers would slip, or try to pull one over. That only works at Walmart/Sams, and Costco would happily drop them.

The return policy is not just to satisfy customers, but a way of /judging/ customer satisfaction. They log why the product was returned, and look at the results, I believe, twice a week. If there's a regular problem with a product, they fix it.

Apple, by dropping them, is missing out on this high customer-service model, and an audience that buys a surprising number of $800 items essentially on whim. Costco will not notice one whit, which is why they have the ability, during negotiations, to walk away when someone won't meet their basic markup, quality and return policies.

Agree with you 100%, very well written and explained.

 

[bizill]

Everyone who doesn't know what they are talking about re: retailing and marketing: shut it.

The posters mentioning that Costco has differentiation by product quality, return policy and lastly cost are totally right. They have a target, which they achieve, of a higher end consumer, with more disposable income. Specifically, than Sam's (and there were other, mostly regional cost clubs when they started).

This is well-known in business and marketing circles. Look it up.

What do we mean by quality? That the Costco buyers pick stuff that meets their target audience. Then the supplier has to sign a contract that the products delivered will continue to meet the quality of the samples. First few years I shopped there, products were a lot more transient, because (and aside from Business Week interviews, I've talked to a Costco buyer) suppliers would slip, or try to pull one over. That only works at Walmart/Sams, and Costco would happily drop them.

The return policy is not just to satisfy customers, but a way of /judging/ customer satisfaction. They log why the product was returned, and look at the results, I believe, twice a week. If there's a regular problem with a product, they fix it.

Apple, by dropping them, is missing out on this high customer-service model, and an audience that buys a surprising number of $800 items essentially on whim. Costco will not notice one whit, which is why they have the ability, during negotiations, to walk away when someone won't meet their basic markup, quality and return policies.

Interesting factioid I learned over the weekend that supports this: (learned from a friend who worked for Apple when Costco first started selling the iPod) The Costco buyers drive a hard bargain on behalf of their customers. Apple couldn't guarantee that they had the ability to supply Costco with enough volume of product to meet their demand, so they ended up contracting with HP to manufacture iPods. These were not "Apple iPods", they were "HP iPods", manufactured under license from Apple. Interesting that a retailer that had such a huge demand for Apple products, that was likely the largest retailer of iPods at the time and helped the product be successful, was not treated better in recent years' negotiations with Apple. Apple needed Costco much more that Costco needed Apple at that time.

 

[sdsvtdriver]

Anyways, it is remarkable that Costco is the only store where I feel I can spend a load of money (on a whim, well said!) and be confident that I got a good deal and will be satisfied with my purchase. Everywhere else I check for deals and research, research, research.

Exactly this. I go to Costco 2x times a week as it is down the street from work as they have quality foods for lunch. I can buy anything there knowing I can return it if I don't want it and I have never been questioned when I did exactly that. This gets me to spend more and they know it. It does irk me to see people return unused food (it all gets tossed, of course) but it is what it is.

Their Kirkland dress shirts are of very high quality too.

 

[koa]

FYI Costco online still has ipod touch 4.

http://www.costco.com/Browse/Produc...=1&Ntx=mode+matchallpartial&Nty=1&topnav=&s=1