Costco has a 3 year return policy, If I returned an item in 3 yrs how do they make money?

Question

Does Costco take the loss or does the manufacturer take the loss? I would assume this would affect their margins.

Answer 1

Costco's largest shareholder, invests heartily because they believe in the business model: "Costco refuses to be undersold and thinks so long term that the company will not even remotely degrade the value it gives customers, even if it would fuel a healthy increase in margins and earnings and very few customers would notice,"

The value in Costco is a clear alternative to Walmart IMO. Where one company delivers products by being the low price leader at the cost of taking care of their staff and customers, the other company delivers low price leadership by a membership model, based upon customer and employee satisfaction.

Costco generates loyalty from delivering uncommon service, paying a decent wage and earning pretax income of $1.75 billion, about 70% of this is from membership fees. Costco is profitable by deliberately managing to their bottom line and maintaining a healthy balance sheet. Costco's low profit margin is intentional and reflects the company's commitment to low prices without sacrificing quality.

They could pay employees less, offer a more agressive return policy, etc.. but there is a cost for all types of business models, and what you might gain in upfront profit, you could stand to lose by being a low cost leader (theft, retention, fraud, etc).

Answer 2

Thats funny you ask that because yesterday they just changed there return policy to 3 months for Televisions, computers, cameras, camcorders, iPOD / MP3 players and cellular phones, man does that suck or what. Source is on the bottom

Answer 3

Probably both but Most People Don't Return what they buy-so it probably doesn't affect them that much-to where they would really care. Any store will have returns if they allow it.