Costco to implement new membership rule to combat resellers

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The Costco chain responds to the growing problem of reselling with new restrictions on the use of membership cards in Mexico and other regions.

Costco, the membership club chain known for its business model based on memberships, is facing the challenge of reselling by implementing stricter measures to protect the integrity of its membership system. The company has recently introduced a rule that seeks to address the unauthorized lending and use of membership cards, a practice that has sparked controversy among consumers and raised concerns about fairness in access to Costco’s exclusive benefits.

Traditionally, Costco members have had the option of sharing a second household card with other people within their household and inviting up to two guests per visit. However, these flexible policies have led to an increase in the misuse of membership cards, especially with the implementation of the self-checkout system.

The new Costco rule seeks to impose more rigorous restrictions on the entry and purchase process in its stores. In addition to the membership card, customers will now be required to present a photo ID when paying at the self-checkout registers. This measure aims to ensure that only legitimate members enjoy the exclusive benefits and preferential prices offered by the chain.

Fighting the improper exchange of Memberships

The central issue is how these new restrictions will affect the phenomenon of reselling that has thrived around Costco’s membership cards. The practice of sharing memberships among resellers to buy large quantities of products and resell them at higher prices outside the warehouses has generated criticism and tensions among consumers.

In response to this phenomenon, Costco is also testing a membership card scanning system at the entrance of some of its stores. This approach would not only strengthen access control, but also streamline the entry and payment process, offering a more efficient experience for customers.

Costco’s initiative comes amid an increase in the improper exchange of memberships, a trend that has worsened since the onset of the pandemic in 2020. The company considers it essential to preserve the exclusivity of its services and benefits for legitimate members, and these measures represent an attempt to restore fairness among consumers and address the concerns expressed towards resellers.

Potential impact on Costco’s business model

The impact of these new rules on Costco’s business model is significant. Membership is an essential component of its commercial strategy, with millions of members contributing substantially to its annual revenues. Any change in the membership dynamics or renewal rates could have significant financial repercussions for the company.

Costco joins other companies that have implemented similar measures to combat the improper exchange of memberships, reaffirming its commitment to the exclusivity of its services and the protection of the benefits for its legitimate members.

What is membership at Costco?

Membership at a store like Costco involves the affiliation or subscription that customers must acquire to make purchases at that specific store. Costco, a membership club chain present in several countries, offers different levels of membership with varying benefits and costs. Members pay an annual fee to keep their affiliation active and gain access to a wide range of products at competitive prices, thus promoting a selective and exclusive shopping environment.

Source: NMC News