alt Hacker NewsAlways found Costco's largest source of profits interesting:
> Revenue from membership fees accounts for the majority of the company's profits, accounting for over 72% of the company's net operating income in fiscal years 2022 and 2023, and 65.5% in fiscal year 2024.[115][a]
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The sentence you quoted from Wikipedia is nonsensical.
Comparing one revenue line to total net profit is a category error: the numerator and denominator measure different things.
In FY2024, Costco did $249.6B in net sales and collected $4.8B in membership fees. Gross margin on product sales was about $25B. That $25B is 5x the membership fee revenue. So, even if you consider membership fees as being free money, membership fees are only 16% of gross margin.
Moreover, without those product sales, the membership would be worth zero and no one would buy it.
I always found that weird because we get like 5x our membership dues back in rewards every year, so I guess we're the exception, rather than the rule?
The membership has another impact on the balance sheet. It not only adds revenue, it also cuts loss from shoplifting
It's a great model. We get the benefit of low prices, they get sustaining revenue that allows us to get those low prices.