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Warehouse Club Secrets: How They Make You Spend and How You Can Save


 
Should You Buy Electronics at Costco?

The electronics category makes up between 6 and 7 percent of Costco's annual sales. Sounds like chump change when you put it that way, but in real money it's actually almost $5 billion a year. (Total annual sales are around $75 billion.) So should you drop cash there for a flatscreen TV or a laptop? Not necessarily, according to Vipin Jain, CEO at Retrevo.com, a popular electronics shopping and review site. We asked, he answered.

Family Circle: Do you find the big brands in Costco or mainly second-tier players?
Vipin Jain: Costco has been selling electronics from day one, but initially there was a lot of resistance from the major manufacturers. They didn't want to be sold in a discount store. So Costco went with new brands like Vizio, which has become much more visible as a result. The big brands took notice of this, and their attitudes started to change. Two or three years ago you didn't always see Sony in Costco, but they're happily selling there now.

FC: How do Costco's prices compare with other retailers'?
VJ: This is an area where they've been very clever. Costco is big enough to cut private deals with manufacturers. As a result, most of the time the electronics products you find at Costco are exclusive to Costco -- you won't find them anywhere else. The differences are slight, like an extra HDMI port or a card reader or something like that. Just enough to get a different product name, so consumers can't directly  compare prices with other retailers that carry the mainstream products.

FC: If an educated shopper were to look behind the curtain, though...
VJ: In most cases Costco's prices are comparable to what you'd find at the online discount retailers. In some cases Costco's prices are slightly higher. In other words they're definitely not some kind of stunning value, just average, and that's at best. There's this perception that Costco's prices are low, and people want to believe they're even lower than they actually are. So they don't double-check. But in the electronics industry there's very little wiggle room on price. The industry already works on very thin margins. You'll get a good price at Costco, but not necessarily the lowest. In general the biggest savings opportunities at Costco are on their store brands. They make 500 to 600 different Kirkland products, none of them electronics... Click Here to read more.