Friday, March 01, 2019

How Costco makes money

The London Daily Mail reports:
Americans use more toilet paper than anyone else in the world, with manufacturing practices by US companies that destroy the habitats of native people who live where it is sourced and contribute to global warming, a new research study has showed.

US consumers use roughly three rolls of toilet paper each week, accounting for one-fifth of the world’s tissue consumption, according to the report titled ‘The Issue With Tissue: How Americans are Flushing Forests Down the Toilet’ by environmental groups and Natural Resources Defense Council (NRDC).
How can anyone use that much toliet paper? The thought of this is making me an environmentalist.

The biggest selling item at Costco is their toliet paper. It is excellent toliet paper, but it is only sold in 36-roll bags.

I thought that this would be a three-year supply for the average person, so I could never figure out how Costco could stay in business with such an infrequently needed product.

Now it all makes sense. If you have a family of six with average American toliet paper consumption, that Costco jumbo bag of 36 rolls will only last you two weeks. You would have to go back to Costco every two weeks just to restock toliet paper. While you are there, you can also stock up on chicken, wine, potato chips, and motor oil.

The average person would probably be embarrassed to buy 36 rolls of toliet paper at the local grocery store. If I needed that much toliet paper every two weeks, I would join Costco just to avoid the embarrassment.

I have always had trouble understanding the Costco business model, as it is very different from every other store chain, and is very successful. It all makes sense now.

Update: This article claims that American toilet paper consumption is exaggerated.

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