why do you have to be a member of costco or sam's club?

is there some law or something?
I know they started out as warehouse stores for businesses and what not, and it has something to do with that.
But why?

Because that’s how they make their money. The profit margins at the warehouse stores are exceedingly thin. They stay in business by padding their revenues with membership fees. There’s no law that says you have to pay a membership fee (other than the contract the members enter into with the store) but there’s also no law that says they can’t refuse to sell to non-members.

Who knows if not the Master?

I think Otto nailed it, they simply choose to do business that way. Potential customers have the choice of either embracing or rejecting that particular approach.


I don’t seem to notice that Sams has cheaper prices than Walmart across the street. Also the selections seem to be about the same. the benefit seems to be smaller crowds and wider isles.

Sams CLub is owned by Wal-Mart so it may be that in this instance they are able to charge the same prices because of the close proximity. I loathe Wal-Mart and all its hellspawn so I don’t know if the Wal-Mart and Sam’s in town, not located near each other, have comparable prices or selection.

I think the nickel and dime thing comes into play more often than you’d think. I know of several people WITH dental insurance. Yet when they had to have a tooth pulled they go to Cook County Hospital (where it is free) to get it done. One lady I worked with had a $5.00 deductable (all she would pay was $5) and yet she chose to wait at Cook County Hospital from 7am to 2pm to get her tooth pulled. She was like “I was off work anyway.”

So how many people with a lot of time on their hands would shop at these wholesale clubs.

I don’t shop at SAMS club that often, but when I do I tend to spend $$ and here are some reasons I do.

1: I do use a lot of certain foods like diced tomatoes or tall kitchen garbage bags, and (as an example) being able to buy tomatoes in a large 24 count flat pack of cans (like Hunt’s diced tomatoes) is a lot more convenient than dealing with 24 separate cans. The normal price on these tomatoes at SAMS tends to be somewhat less the the normal price at Grocery stores.

2: They have a nice selection of fairly good shirts (Arrow, Izod, Ralph Lauren-Polo etc) at remarkable prices (about 1/2 retail). They also occasionally have a nice selection of fairly nice classic leather jackets in XL/XT (this combo is difficult to find) for about 1/2 retail.

3: Their limited selection of computer accessories is very competitively priced

4: There have some larger quasi-industrial items that are difficult to find elsewhere

5: Their stock of tires is remarkable, well priced and I can usually get then changed in less than 45 minutes.

Not everything is cheaper, but if you shop carefull you can do pretty well.

I think it’s also a bit of a marketing ploy – give customers a little barrier to overcome and they’ll feel that it’s more worth it (like a big line outside a nightclub means its worth waiting for, right?), plus once they are a member, they feel like they need to get some use out of it, so they’ll shop a little more.

I don’t have any confirmation that this is a motivating reason for them, but I have seen in print (in a grocery trade magazine), a manager of a warehouse/bargain type store talking about the poured concrete floor of the new stoor. The poured concrete was actually about the same cost as a tiled floor (which you see in most supermarkets), but, importantly, it LOOKED cheaper to customers. They then assumed they must be getting a good deal because clearly the store isn’t wasting money on frilly tiles.

Gotta love marketing sometimes…

My understanding is that manufacturers used to place restrictions on retailers on how low a price they could charge. They didn’t want to devalue the brand by having it sold too cheap and they wanted to make sure that “better” stores with customer service, nice fixtures, etc. could afford to carry the merchandise. The restrictions did not apply to wholesalers who didn’t sell to the general public. I think the law has changed and manufacturers can no longer set retail prices. That’s why you see “manufacturers suggested retail price”.

This is how my father, who used to be in retail, explained it to me as a lad.

We have a Costco here that I’ve gone into several times just to browse (I’ll explain how, below). I’ve not gotten a membership at either Costco or Sam’s for the reason Quercus mentioned – I feel I’d be obligated to shop there to get my money back. Okay, that wouldn’t be so bad itself, but the fact that they don’t take credit cards bugs the heck out of me. I know, I know: that would increase their prices. So charge me the markup! I know, I know: that’s against the merchant agreement (and the law in many places). I haven’t written a paper check in ages (I think they take checks), and one of them takes their own credit card (flip flops from Amex to Discover or something like that). I suppose I could bring myself to use debit, but that screws up the simplicity of my record-keeping (i.e., charge everything and have a single record of where everything is spent). Oh well.

So, here in Michigan anyway, the liquor control laws mandate that retails sales be made to the general public exclusive of “club” memberships. So, if you’re in Michigan and you just want to walk in, tell the bully that you’re buying alcohol. He has to let you in. Oh, and you can buy alcohol there if you want to. No membership needed at all.