5 Reasons I’m Not Crazy About Costco

I feel like I should change the name of my site to the “Top 5 Blog”.  The format allows me to complain…errr, explain my view points in a very succinct and readable format.  I’m pretty sure that whenever my blog is ready to support affiliate marketing I will have alienated so many mainstream companies that they won’t want anything to do with MoneyIsTheRoot!  Today’s posting is about Costco and why I’m personally not buying the hype, or the annual membership.

This post really is about warehouse clubs in general, and not necessarily Costo only, but they seem to be the most prevalent in my area.  Two representatives recently came into my work and setup shop in our company cafeteria.  If you signed up for a membership between 11am – 1pm then you could receive a $10 gift card to Costco as a free bonus.  I decided to give a shout over my cubicle wall to see if any of my fellow coworkers were going to bite on the deal, and that prompted several of them to walk over and extol the virtues of Costo.  Gathering a quick consensus I noticed that the two biggest loves of Costco is it’s convenience of one-stop shopping, and their “discounted” products.  Enough of the lead-in, let me get to the five reasons why I’m not buying into Costco.

Did You Know They Sell Consumer Electronics?

One of my eager Costco loving co-workers purchased a new television from them this past Christmas.  He was absolutely convinced that purchase alone justified his annual membership fee of $50.  You can currently purchase a 32” 1080P Samsung TV from Costco for $400 plus sales tax (6% in Michigan) provided you are a member, or you can purchase it on their website and have it shipped to your house for an added $50.  A quick search of Google Shopping revealed a purchase price of $319, free shipping, and no sales tax.  For me that is over a $100 in savings, conveniently shipped to my front door, and oh yea…no membership needed.  I’m a big fan of online shopping and the money you can save, if you get a chance please check out my previous post The Beauty of Online Retail.

Yes They Even Sell Engagement Rings

Hey don’t laugh, there is even a Murray’s Auto Supply in my area that sells engagement rings…talk about product diversification.  Don’ get me wrong, they have diamonds of all quality, and if they had the best prices then this post would have an entirely different theme.  In all fairness, they actually have quite the selection, and there is even a ring for $227,000 available… is this Tiffany’s or Costco…I forget.  I found a ring on Costco, an Asscher and Baguette diamond ring for $5,000.  I went on Blue Nile (www.bluenile.com), a convenient website that allowed me to put in the exact same specifications as those on Costo.com, and I was able to piece together the exact same ring for $4,500.  Not only is that a 10% discount (which I’m sure would increase with a more expensive ring), but they offer more flexibility in sizing as well.

They Offer The Cheapest Gas Around

I know more than one person that swears they have the best prices on gasoline, and will drive out of their way just to fill up the tank at Costco. A quick search of gas prices by zipcode (thank you Gas Buddy!) showed that my local Costco is $3.50 a gallon, while my local Speedway is $3.48 a gallon and one mile closer to home.  Also, if you go on discounted gift card sites like Plastic Jungle you can find good deals on cards for local stations…maybe even saving 5% – 10% off your total purchase. In fact, you can use this method for a variety of purchases, see my previous post No Gift Card Left Behind.

Have You Ever Purchased Tires at Costco?

I haven’t, and I dont ever plan on doing so.  I did another quick search on Costco and found that four Michelin tires for my vehicle would run me $864.  I then did a search on Discount Tires website and found the exact same tires for a total cost of $804.  Granted it’s only $60 in savings, but savings are savings, and that purchase won’t cost me a membership fee.  If you do a search for Discount Tire on Retail Me Not you may be able to find added rebates and discounts to further those savings.

Wal-Mart vs. Costco

Let me just say that I don’t have any love for Wal-Mart, this section is not about me promoting them but rather another comparison to Costco pricing, and another option for consumers.  One-stop shopping may have propelled Costco into retail stardom, but their main staple has always been groceries.  A comparison of grocery prices are a bit harder to compare, they are many different brands, package sizes, etc.  However, I do have a few sample items that we can compare.  A 36 count package of 12 oz. cans of 7-UP is about $0.45 cheaper at Wal-mart.  A 30oz. bottle of French’s mustard is $0.06 cheaper at Wal-mart, and a fresh pork loin is $.01 less per pound as well.  I’m sure you could go into a Costco and find a dozen different grocery items that are less expensive than Wal-Mart, but then again, you are paying an annual fee to buy those items.  Let me further clarify by explaining I am aware Wal-Mart owns a warehouse chain of their own, Sam’s Club.  I’m not anymore a fan of them than I am of Costco.  Though I do find it funny that the Sam’s Club near my house closed last year, and they are building a new Wal-Mart supercenter about a mile from that location…maybe they are on to something!

I probably could have extended this list to 6 reasons, since I’m especially not a fan of waiting in line to leave the building.  Yes, at Costco you are guilty until to proven innocent, since they check your bags in comparison with your receipt before you can leave the place.  This is just some food for thought, take from it what you will. You know my motto here…money is the root of all things good! So it’s only natural that I like to save as much of it as possible!

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25 thoughts on “5 Reasons I’m Not Crazy About Costco

  1. Squirrelers

    The guilty until proven innocent part of it is what I find to be odd…and annoying, amusing all in one. I guess I don’t see why it’s necessary there, and wonder it that part of the customer experience has been analyzed by them.

    I did visit there this past weekend and had a good experience. Good purchases, saved some dough, and picked up a few new things I wouldn’t have bought originally. The latter point is usually bad, but I substituted so it’s a wash. Key there is to be disciplined with shopping.

    1. matt

      The reason they search your bags is costcos profit margins are extremely low around 17% i believe walmarts are closer to %50. they check your bags because they cannot afford to have any product stolen ergo checking your bags translates into savings. If your wondering why walmart has a higher profit margin but charges less its due in part to the fact that they have enormous buying power through same club and its international names.

  2. admin Post author

    Ive never understood why they do that…maybe its because they have a ring available for 227K? lol. Best Buy has gotten into that habit as well, but you tend to have fewer products to sift through, and shorter lines to wait in.

    Yes we all need discipline with shopping, myself included.

  3. ConsciouslyFrugal

    A consideration I don’t see present (particularly in comparing Costco to Wal-Hell) is employee pay, benefits and the spread between CEO and employee salaries. In short, Costco (as much as it pains me, as I believe big box stores to be an abomination) has something akin to a soul, whereas Wal-Hell feasts on the flesh of the poor across the globe.

    Yes, I am prone to hyperbole. 😉

    I’ll happily pay more to support an organization that conducts business in a more ethical manner, which is why I try to support local businesses run by folks I know and will toss a few extra coins to places like Costco when that option isn’t availble.

    1. admin Post author

      I appreciate the comment, to be honest, it’s nice to have someone with a dissenting opinion on my blog finally! As I said, Im not promoting, nor am I a fan of Wal-Mart…I couldnt agree more with their shortcomings as an employer. However, since groceries are the main staple of Costco I felt obligated to include a comparison…given the bulk sizes of Costco, and the need for a comparison with a store that has a very national presence, I thought Wal-Mart would be the easiest comparison. Don’t think for a second that Costco doesnt markup their products significantly!

    2. diane

      I would NEVER shop at Walamrt, and despite having 2 professional jobs, I probably would fall into the “poor” category income-wise.

      But I will NOT save money at the expense of integrity. Walmart’s practices are horrifying, and he strangest thing to me is that many of the people shopping there are the same ones shouting about “wanting their country back”.
      Walmart is the quintessential example of everything wrong about corporate practices at the expense of the individual, the worker, the disappearance of small businesses and the changes in this country.
      I have read extensively about Costco’s founder and business practices and I WOULD shop there if choosing to shop for bulk items at a big box store.

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  5. kh

    I agree with @kay lynn and @consciouslyfrugal. I shop at Costco and it’s worth it to me. There’s one right down the street from my office and I pass it every single day.

    And I started to write out the list of why I like it, and realized that it’s turning into a post of it’s own. So I think I’ll write a “rebuttal” post for next week rather than write a full novel of a response! 🙂

    Suffice it to say that I’ve done the cost analysis on my own shopping patterns and it does save me money – more than the cost of the annual membership. But I don’t buy electronics or jewelry there. I use it for household goods, groceries, and some medical stuff.

    1. admin Post author

      I look forward to reading the rebuttal, I’ll be looking for it! Some people can save money by shopping at Costco…just not anyone I know of. I am glad to hear that you stay away from the electronics and jewelry, they can found for much cheaper. Meijer is my favorite place, I can find everything there for much cheaper and in bulk if I want.

  6. The Saved Quarter

    We’re Costco shoppers. I don’t buy electronics or jewelry there, and have found the store brand products to be of great quality at very competitive prices.

    Gas really is cheapest in my area at Costco by at least 3%, and I’ve never seen a gift card for more than 3% off on gas. My husband drives a LOT for work, so he got an executive membership and Costco American Express and gets 4% back on the already lowest gas price around.

    Milk is where we really save at Costco. We can get 2 gallons for barely above the price of one at the grocery store. I don’t shop at Walmart so I don’t know the price difference, but it is certainly cheaper than the grocery alternatives here. With two young kids, we go through a lot of milk, and I’m sure we make up our membership in milk alone!

    1. admin Post author

      It does depend on where you live, I agree. Costco just isnt as conveniently located as most other gas stations, or supermarkets in most areas. I already have a travel rewards card for Spirit, which has many flights out of my local airport. I also have a Discover More card which I sometimes get 5% back on. Between those I just dont want to open another credit card, and I know most people who shop at Costco prefer to use the AMEX.

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  10. Funny about Money

    Interesting post.

    It’s true that when you’re shopping at Costco, you need to know what the prices are on the general market at any given time. And it certainly is true that you often get better prices ordering things on the Internet.

    However, Costco will take back ANYTHING. I returned two pairs of glasses I decided I didn’t like, eight months after the fact, and incredibly they gave me a full refund. Their return policy on electronic goods is a little more limited, but you still have six months in which to return the junk, no questions asked. Can you imagine having to pack up and ship a 32-inch television set, assuming you could even get the online retailer to take it back?

    I have checked gas prices here. For awhile, QT was matching or underpricing Costco. That is no longer true. At this time, Costco is offering rock-bottom prices, depending on the Costco outlet where you shop. In the Phoenix area, gas prices vary by region. Prices rise as you go toward the upscale east-side areas and drop as you go toward the downscale west side. Each Costco outlet bases its price on what neighboring stations are charging. The Costco nearest to my house, which is deep in the low-rent district, underprices everyone in the city.

    When you buy gas with your Costco AMEX card, you get a 4% kickback. Thus $3.45 a gallon gasoline is actually costing you $3.31, a 14-cent-a-gallon saving on gas that often is 10 or 12 cents less than the going price in the neighborhood. That starts to get significant.

    The meat prices are far from lowest in town. However, Costco’s meat is superior to that available at every retailer in the Phoenix area except for a small gourmet store and Whole Foods, and I don’t have to drive across the city to get to those upscale stores in order to buy better meat. In that department, you get what you pay for — the price is about the same as Safeway and Albertson’s, but the quality is much better.

    Can’t imagine buying fine jewelry at a place like Costco or Walmart. If I can’t afford top-quality jewelry (which I can’t), I don’t buy it at all. Much prettier stuff is to be had at much better prices from artists and crafters who make it themselves.

    One thing that pushes up prices in Costco is their suppliers’ tendency to package extra stuff with a basic item. Buy an electric toothbrush and you get something like an extra set of brush heads and a tube of toothpaste, stuff you don’t really need that drives the price above what you would pay if you walked over to Target or Walmart and got just the toothbrush by itself. I find this trick annoying and so don’t buy items that come with extra doodads. But otherwise, the prices in general are the same or less than what other retailers charge, the quality is generally better, the return policy can’t be beat, and being able to limit shopping trips by buying in bulk saves me a lot of gas over the long run.

    1. admin Post author

      Thanks for taking the time to send back such a detailed response! As far as the return policy, I do agree Costco is good with their return policy. I always order consumer electronics from online retailers with positive reviews, and generous return policies. Granted it would be a pain to ship it back, but then again it was quite easy having it delivered to my door as well…and thankfully I havent had any issues yet that caused me to send anything back.

      As for the gas prices, if is truly the most convenient and cheapest gas in the area, then yes that is a good deal. Though consider that you drive 12,000 miles a year, and your car gets 25 mpg, saving 14 cents a gallon would be $67 a year…assuming that you could even fill up at Costco each and every time…when traveling its probably not as likely.

      Costco meat is pretty good quality, my mom used to buy from there frequently. We have some niche markets by me that have far superior meat and comparable prices. I might not go to Costco for my meat, but I probably wouldnt go to Kroger or Wal-Mart for it either.

      I wasn’t really familiar with the product bundling at Costco, that would upset me as well. I have seen this at many other places now, must be a new thing for retailers.

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  12. Emma Chace

    As a single person, I find that I have no need for Cosco or Sam’s Club. My mother always said (and I agree): “you buy in bulk, you eat in bulk.” Not to mention I also do not appreciate when they check the receipt at the door, it does give off an impression of mistrust.

    I’m sure later in my life when I have a family I will find the use for such places, but for now I’m just fine at my local grocery store.

    1. admin Post author

      It’s the same for me, I only shop for one right now, so it’s especially true for people in our situation.

      Not to mention I’m much more tempted to pick up the $5 foot long from Subway before I go to a store and purchase all the necessary ingredients to make one myself…since it is only me.

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  14. Anita

    I work at costco and I will tell you the reason we check receipts at the door I
    Is the cashiers sometimes miss things and/or I have also found some items to be rung up more than once. Believe me, when I find the overcharge, the member is always grateful we checked their receipt!!
    I also know the tires are Better deal bought here because you will never have to pay for a flat repair or rotation and also they will put air in your tires upon request, which I know alot of people appreciate so they don’t have to do it.

    1. admin Post author

      Im actually in the process of writing a rebuttal to myself, since I now feel differently about Costco… however I do want to say that they never check my receipts close enough to actually catch a mistake…when I purhcase $300 worth of items that is a bit difficult to scan through a receipt.

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  16. matt

    I didn’t realize you guys are posting back in 2011 here are some cool links from the future you should check out

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