In US members can buy a shop (gift) card and the recipient can shop in Costco without having to be a member.
Is this available in NZ?
Costco Shop Card - Available in NZ?
Baagin on 29/09/2022 - 12:59
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What happens if I have a $200 card but end up spending $205? Do I have to put $5 of good back or will they let me pay the shortfall in cash/eftpos?
A merchant will never turn a business away…haha, I heard they will let you pay the shortfall.
So I can get 10 x $20 gift cards and go in and buy $500 of stuff, use one $20 giftcard and pay the balance?
That's what I want to know.
That's provided they do sell $20 gift cards. I read somewhere that they will let you pay the shortfall, but specifically how that works I'm not sure.
I am curious too
after the checkouts they have the shop cards avaliable
Almost forgot about this. Doesn't this heavily undermine their memberships? If you have a friend that can buy you shop cards, there is no reason to pay for a membership.
Not really, shop cards are like trial subscriptions in which Costco hopes many will eventually convert into full paying members.
AFAIK if you buy something there you'll have to first spend the shop card balance, so unless you want to give Costco up to $999 for them to earn interest, you'll be needing multiple shop cards for multiple shops. And unless you have a friend that regularly goes there and remembers to buy shop cards for you with their every shop, you'll have to collect multiple shop cards for shops many months into the future, which again is like giving free money to Costco for them to earn interest.
And Costco rotate their stock daily, so there's always some new product to check out. Plus they have "instant rebate" discounts which come and go by the day, and the cut-price foodcourt. That's the draw for membership, and enticements for members to come shop often, even if they primarily cater for the bulk shopper. Facebook groups like Costco NZ fans help spread the word around for new products and specials.
Still shop cards might make sense for out-of-towners.
Found a new group today "Costco NZ Dramas and Issues"…haha, for people to post anything they can't post in the heavily censored "fans group"
Right now savings interest rates are around 3%. To make it more financially economical to buy a membership, you would have to have an average of $2000 in shop card value across the entire year that would have otherwise gone into a savings account. This is hardly a significant factor when inflation is at over 7%.
I agree that the shop cards are like trial subscriptions…, but like other trials, if you can repeatedly get a new trial, there is no need to pay. This is very achievable if you have a modest amount of surplus and then get regular top-ups as most won't frequent the store but will go maybe 4 times a year to stock up. Your friend doesn't need to go particularly regularly, you can wait to go after them if you run out of balance as the stuff from Costco typically isn't urgent and is usually conglomerated into one big shop.
This is obviously not a perfect replacement for the membership but is definitely a viable replacement for a lot of customers, hence heavily undermining their membership based business model.
I heard someone mentioned that this membership based business model could just be a tactic they use to avoid any potential legal actions from local suppliers, etc when they undercut local competitors by parallel importing products, etc. If that's true, they probably don't really care how people spend their money there as long as they spend their money there, membership or not.
@akrotohur: I faintly remember a claim that around 70% or a large majority of Costco's profit comes from memberships
@Bill: The substantial profit from membership fees is due to the fact that most Costco members don't know the unwritten rule of Costco memberships: You're supposed to eat back the membership fee with cut-price hot dogs and rotisserie chickens.
This is also why so many companies (e.g. Game pass, Adobe CC, Amazon Prime) are pushing for subscription plans, as they're recurring revenue and people often forget to cancel subscriptions they don't use, or not use them enough.
Shop cards aren't just a way to collect interest, they're used to strengthen cashflow, and I'd imagine those with shop cards spend much more on a shop than regular members, because those cards are only for one-time use. And a few people will get hooked and become full members.
@Avantime: I don't think the cards are one time use. Obviously, there are economic benefits from the use of shopcards, but the incentive Costco has does not detract from the benefits to the consumer. No matter how good their cash flow/uncashed equity becomes, they will always lose out if a otherwise membership paying customer is getting to shop there for free due to getting shopcards.
@Bill: You're right that they're not exactly one-time use, but the typical spend per shop is something like $300+, so unless you load the shop card by more than that amount then it is in effect a one-time use card.
I wouldn't load a shop card that I intend to "sell" to my friend with anything more than the minimum amount, unless they pay me in advance. In fact at times it's probably easier for them to tag along, instead of using shop cards. Unless we start seeing a cottage industry spring up of people reselling Costco shop cards on Trademe and flea markets, I don't see Costco having too many problems with people not signing up for memberships - Costco has shop cards worldwide for decades and they never had any issues with shop cards cannibalising memberships.
Remember Costco is the 2nd largest retailer in the world, they've done all the accounting math needed for the cost/benefit analysis of shop cards. Probably the same math that showed them cut-price hot dogs and rotisserie chickens routinely draw in more spending & profits than the loss-leaders are losing. You may think it's stupid of them to offer shop cards, but their accountants know what they're doing. I mean look at Costco's share price over the last 20 years.
@Avantime: Yeah, I think whatever is published in their financial reports appear to be the result of some clever accounting under the hood. Things like how they appear to be making the bulk of their profits from membership fees and they only do a max 15% markup on most products, etc, I take those with a bulk grain of salt…haha, and those so called "loss leaders" too.
@Avantime: Obviously, in the grand scheme of things, their shopcards will make them money, hence why they have it. But for those who are not in the majority, the shopcards leave room to be exploited.
Essentially, it is the many that can allow costco to continue subsidising the few.
If everyone used shopcards to bypass the need for a membership, you can bet on them removing it straight away. It is just that the people who share the membership though shopcards are not hurting their bottom line enough to care. Even if they tried to stop it from happening, other solutions will arise, such as using hijabs to look the same.I never claimed it was "stupid" of costco to offer shopcards. They will have obviously calculated it as they wouldn't just be standing with their finger up their arse losing money. It is just that the shopcards open up a possibility to bypass their membership for those who want to, which one would presume is their main source of profit.
@Bill: There will always be people who share Netflix passwords, buy Turkish Game Pass, buy SIM cards in bulk to register for new member freebies, watch live football on the BBC with a VPN, use browser extensions to bypass newspaper paywalls, and take advantage of Costco shop cards etc…..
If you know how to work it and it works for you, then it's great. But in the grand scheme of things they're relatively insignificant, that is until these big corporations start penny-pinching, like what Netflix is doing recently.
If yes this will be under many many Xmas trees :)