Wednesday, October 21

Why is Costco gas so cheap? | The NY Journal


The gasoline prices given by the company are among the lowest in the market

There is a good chance that people who come to the gas station will also enter the store to buy merchandise.

Photo: FREDERIC J. BROWN / AFP / Getty Images

Costco is well known to give good deals on bulk items, but many are surprised that they are also able to give low prices on gasoline. In fact, the company’s gasoline prices are among the lowest that exist.

But, how does the chain make a profit and maintain these prices?

The answer to this question is that Costco relies on the loyalty of its partners. To buy gasoline, you must be a member, and membership sales account for about 75% of the chain’s profits.

Because new customers are attracted to membership due to low prices for gasoline and other products, the chain you can afford to price your goods and services much lower than your competitors, since they cover their possible losses with the gains they have for the memberships, according to Mashed.

In addition, by having the service stations right next to the store, it also encourages customers to enter to buy merchandise, which means that, each time a customer goes to load gasoline, the chances of this person entering the store also increase. to spend more money.

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