The main reason it's doing well is because it's basically Disney. Freezers in Japan are tiny and nobody buys in bulk. The experience of going there and buying huge packets of stuff, sharing with friends/family, wrapping and freezing the individual items inside or immediately cooking them to make meals to keep in the fridge - it's a novel experience and has become something of a ritual or hobby among people. Lots of YouTube videos about this. Everyone wants to go at least once just to try it. Many don't go again.

Living in Okinawa I also noticed the proliferation of reseller stores. They charge a reasonable margin and let you buy 4 or 8 muffins instead of 50. It makes perfect sense in Japan.

Incidentally I was disappointed that 90% of Costco Japan's goods are Japanese origin. You'd expect them to be full of American stuff but the majority is not. Even the imports are often the same items you can find in other supermarket import sections.