Costco vs Sam’s Club has been at loggerheads for who is the better retail giant for a while now and if you’d like to find out which is better, read this piece.
Costco and Sam’s club has been on the top of the lists of retail shops that offer lower prices and they sell items like toilet paper inbuilt to make this happen.
For this retails shops, their caveat is that either need a large family to eat all of the food and use all the supplies you buy, or a method to preserve it (canning or freezing).
Through the years, these bulk retailers have expanded and started to offer several other items, including electronics, vehicles, and vacation packages.
This article will be comparing Costco and Sam’s Club using their price range, location, and other things as yardsticks.
Take a look at our table of content for an overview of tis article
How Does Costco And Sam’s Club Generate Revenue
These two retailers generate revenue from merchandise and product sales and membership fees. These memberships get you into the store and allow you to shop at the discounted prices online. More importantly for Costco and Sam’s Club, these memberships help create store loyalty.
If you’re paying to be a member somewhere, you’re more likely to go.
The two companies are similar when you look at their business models, and yet they’re still different.
Costco is a publicly-traded company, while Sam’s club is a subsidiary of Walmart.
Considered the original bulk retailer, Costco opened its first location in San Diego in 1967. Since then it’s been selling bulk goods through its warehouse-style stores, corning the market in many states.
The retail store had 795 stores as of the end of the fiscal year 2020 (ended Aug. 31, 2020), with 552 of those in the U.S. The company has been aggressively opening new warehouse stores over the years. In the fiscal year 2020, Costco opened 16 stores, while it opened 25 in both 2019 and 2018.
In terms of states where Costco is concentrated, it has 131 stores in California, almost four times its number two state—Texas with 33. Meanwhile, the state of Washington has 32 Costco stores. Five states have no Costco stores—Arkansas, Maine, Rhode Island, West Virginia, and Wyoming.
They also has stores outside the U.S. This includes stores in Canada, Puerto Rico, Mexico, Japan, China, and other countries.
The company offers two membership tiers: Gold Star and Gold Star Executive. The Gold Star membership costs $60 a year and offers access to all its stores and two membership cards. The higher-level membership is the Gold Star Executive, which is $120 per year. The Gold Star Executive level includes all the perks of the Gold Star level plus a 2% cashback reward (up to $1,000) on all Costco and Costco Travel purchases. Gold Level Executive members also get other discounts and benefits and the Costco Connection Magazine.
It’s worth noting that Costco also offers a business-focused membership. This includes two tiers as well: Business and Business Executive. The Business level is $60 a year and includes the benefits individuals enjoy, as well as the ability to purchase for resale. Meanwhile, the Business Executive level is $120 a year includes a 2% cashback reward (up to $1,000) on purchases, as well as “additional benefits and discounts on many Costco services.”
Benefits And Perks
One of the key benefits and perks of Costco’s memberships include access to its fueling stations (which often offer lower prices than other fuel stations), pharmacy, photo center, and rental car options. For business customers, Costco offers partnerships with payment processing, health insurance, bottled water delivery, and check printing services.
They also have a co-branded credit card for members. The card, which offers tiered cashback, is considered a solid credit card for those that shop at the retailer. The card is co-branded with Citi and offers 4% cash back on the first $7,000 spent on fuel per year (1% after that), 3% on restaurants and travel, 2% on all other Costco purchases, and 1% on all other purchases. The co-branded card offered by Costco and Citi can be used anywhere credit cards are accepted.
Finally, it’s worth noting that Costco sells more private branded goods than Sam’s Club. As a Costco shopper, you’ll likely find more brand name items in Sam’s Club. However, Costco offers its popular private brand Kirkland in its stores.
Kirkland items are often cheaper than most other products, but they’re still made by big-name companies, such as Starbucks (SBUX), Duracell, and Kimberly-Clark (KMB).
Costco is a publicly-traded company under the ticker symbol (COST). It has a market value of over $171.3 billion as of Nov. 17, 2020. It has several smaller subsidiaries, such as Costco Travel and Kirkland brand products, but aside from that, the company has not branched out into a broad range of other brands and stores.
Revenues for the fiscal year 2020 were $163 billion, up from $149 billion in the previous year. As well, profits came in at $4 billion, up just over 9% year-over-year (YOY). Financial positioning wise, Costco is well-positioned.
It had $12.3 billion in cash and cash equivalents at the end of fiscal 2020, while other liabilities—which includes long-term debt and lease obligations—was $21 billion. Its total assets total $55.6 billion, which includes almost $22 billion in plant, property, and equipment (PP&E).
The Sam’s Club
Nearly as old as Costco, opening its first store in 1983 in Midwest City, Okla. As far as business models, they’re very similar—both sell memberships to a store where customers buy bulk items. One key difference is that Sam’s Club did not expand to the same areas and product categories as Costco.6
Sam’s Club operates 599 stores across the U.S. as of the end of the fiscal year 2020 (ended Jan. 31, 2020). Unlike Costco, which has been aggressively opening stores, Sam’s Club has kept its store count relatively steady over the last few years. Its store count has been relatively stable over the last couple of years after closing 60 stores in fiscal 2018.
Its state with the largest store concentrations are Texas with 82 stores, Florida with 46, and California with 29. Meanwhile, Sam’s Club has no stores in six states—Alaska, Massachusetts, Oregon, Rhode Island, Vermont, and Washington. Its only international locations are in Puerto Rico.
Like Costco, Sam’s Club offers two membership levels. The first is called Club, which is $45 per year. The Club Level includes access to all its warehouse clubs, as well as the ability to add additional cards. Then there’s the higher tier Plus membership for $100 a year that has all the benefits of Club, including other perks—2% cashback on certain transactions (up to $500), free shipping, early store access hours, and access to its pharmacy and optical services. Overall, both of Sam’s Club’s membership tiers are cheaper than what Costco offers.
Benefits And Perks
Key benefits of a Sam’s Club membership includes access to its stores, as well as its fuel stations and tire and battery centers. Meanwhile, the higher tier membership offers specific discounts for certain services, such as 20% off eyeglasses at its optical centers and up to 30% off branded drugs at its pharmacies.
Sam’s Club also offers a credit card as well. Sam’s Club’s MasterCard is issued by Synchrony Bank and can be used everywhere credit cards are accepted. The perks of the card include 5% on the first $6,000 in fuel purchases per year, then 1% thereafter. As well, the card offers 3% cash back on dining and travel and 1% on all other purchases.
Sam’s Club generated $58.8 billion in sales during the fiscal year 2020, less than half of Costco’s sales. However, Sam’s Club’s parent company, Walmart, boasts a $431 billion market cap, more than 2.5 times Costco’s market cap.
Sam’s Club’s fiscal 2020 sales rose 1.6% YOY. Walmart does not break out where sales come from—i.e. product sales versus membership sales. The Sam’s Club segment has $13.5 billion in assets, up from $12.9 billion at the end of fiscal 2019.
Differences Between Costco Vs Sam’s Club
Costco is a public traded company that trades under on the Nasdaq as Cost while Club is a subsidiary of Walmart and trades under the ticket WMT on the New York Stock Exchange.
Costco’s membership fees are cheaper than that of Sam’s Club and they have more stores than Sam’s club. However, Sam’s club has more U.S stores than Costco.
While Sam’s club has presence only in the U.S and Puerto Rico Costco has more international presence. California is the state with the highest number of Costco stores, while Sam’s club has most of its stores in Texas. Rhode Island has neither of the two stores.
Sales wise, Costco generates almost three times the amount of sales. Product-wise, Sam’s Club offers more name brands, while Costco has more private brands. For store size, Costco has slightly larger stores at an average of 146,000 square feet, while Sam’s Club’s average 133,000.
It’s easy to say that Costco is growing bigger in terms of stores and revenues, seeing that they have opened more stores than Sam’s club that had to close 10% of its stores in 2019.
They both have similar return policy for products except electronics that has only 90-day window.
Costco vs Sam’s club has same business model.
The two stores offer great prices to its customers and give you value for your money. However, Costco has cheaper prices than Sam’s club while Sam’s club has more name-brand products to offer.
For their membership fees, Sam’s club has a cheaper membership fee for both tiers of membership, while Costco has more stores overall.
This said, the two retail stores are ideal for people who love to buy in bulk, because it’s cheaper to buy in bulk in either of the stores than buying units.
There’s a disparity in membership fees for Costco vs sam’s club, but it’s not enough reason to start looking for one shop when the other might be closer to you.
Note, some Costco vs Sam’s Club stores are laxer when it comes to checking for membership cards when you enter the store. Although you’ll still need one to checkout, you may be able to do a test-run and get a feel for your local store with a walk-through.
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