– English Lyrics

Lyrics & Translation

[English]

Welcome to Costco, the world's third

largest retailer. This is the place

where you walk in with the intention to

stock up on 48 rolls of toilet paper and

instead leave with a sixperson

inflatable hot tub. They also make 73%

of their profit before you even put a

single item in your cart. And on the

surface, it seems simple. Sell in bulk,

keep prices low, charge a membership

fee. But behind the concrete floors and

giant tubs of peanut butter is one of

the most quietly brilliant retail

strategies in the world. A company whose

private label outs sells entire

multinational brands. And a company who

is managed to become beloved by both

dads who stock up on industrial-sized

everything for their suburban kingdoms

and Gen Z's who split bulk groceries

with their roommates to save money. But

how does Costco manage all this success?

Because I figured there's got to be more

underneath the surface than the typical

things that we know and love about

Costco. So I dug into it and in this

video we're unpacking the whole Costco

playbook. how the membership model

unlocks something so much bigger. Why

Kirkland is more than just a typical

private label brand. How Costco earns

your trust and your impulse buys and

whether this warehouse giant can keep

its magic in the digital world. Let's

discuss.

[Music]

First and foremost, you guys know I'm

not here to mess around. For those who

have never been, or those who have been

but want to vicariously feel the Costco

magic, let's start with the store

experience. You enter the massive

warehouse style retailer. You slash your

membership card. That's right. I became

a member for this video, but also it was

just a matter of time. And are greeted

by huge carts, warehouse lighting,

concrete everywhere, the smell of

rotisserie chicken, and Michelin tires.

Sounds kind of incredibly weird now that

I say it out loud, but it's weirdly

comforting. Costco has no frills,

minimal signage, and pallets stacked to

the high heavens with vast amounts of

inventory that only forklifts can move

around. Something you might notice right

off the bat is that most things here in

Costco are huge.

Selling in bulk and in large quantities

are a famous part of Costco's business

model, but more on that later. Now,

aside from this brutalism chic vibe that

Costco has curated, they are also famous

for the treasure hunt. They reel you in

with essentials at affordable prices,

some of which actually lose money for

the company and then entice you with all

of these other weird interesting things

to drive impulse buys. The most famous

Costco loss leader that gets people in

the door, the $150 hot dog and soda

combo. This combo has been a $1.50 since

the 80s. And Costco management has made

it very clear they are not going to

change the price despite increasing

prices and inflation for the last 40

years. And this isn't just a cheap

wiener. It's an iconic part of the

Costco experience. Even as a little kid,

I remember coming into Costco with my

parents and my brother, shopping, and

then finishing with one of these bad

boys. $1.50 every time. And it's become

a bit of a cultural phenomenon. So yes,

I am literally eating Costco's profits,

but it works. It gets people in the

door. And once you're inside, that's

where the real treasure hunt begins. I

joke that Costco is the only place where

you can buy an industrialsized tub of

mayonnaise, a diamond ring, a 6-ft tall

teddy bear, and prescription glasses all

in one place. But the common thread

across all of that randomness, they are

all good value for the money. And that's

kind of the Costco promise. And finally,

who are all these shoppers around me

that I'm desperately trying to avoid to

film this video? Well, the stereotype is

that they're soccer moms coming here to

buy 48 rolls of toilet paper, which

isn't untrue. The average Costco

customer is aged 39 to 55, household

income over $100,000, married with kids,

has a 4-year college degree or higher,

and spends $100 or more per trip to

Costco. However, Costco is actually

proving to have some multigenerational

appeal, which we'll talk more about

later. But one thing that many Costco

shoppers have in common is high brand

loyalty, especially to Costco's wildly

successful private label brand, Kirkland

Signature. So, let's dive into Costco's

business model, how they make money

through product strategy, and the

underrated success of their own private

label. For a company that sells

superersized everything, Costco makes

surprisingly little profit from the

stuff that's in your cart. Not so

surprising. Retailers that have low

costs generally do so by accepting lower

profit margins. But when I dug into it

further, I found something very

interesting. Costco's public pricing

rules say that they will only take a

maximum of a 14% markup on name brand

products. 14% is already much lower

compared to traditional retailers who

typically mark up name brand products

anywhere from 25 to 50%. However, for

their private label, Kirkland, which

they can produce at lower cost, they

allow themselves to take just one more

percentage point at a maximum 15%

markup. Now, this might not seem that

significant, but there's a lot to unpack

here. First of all, the public price

discipline, literally stating that they

will not take a higher markup in these

percentages creates a ton of trust

within their customer base. Costco would

rather mark something low, move it off

the shelves in huge quantities, keep you

coming back, than to mark it up higher,

and having it sit around collecting

dust. And this kind of breaks so many

rules of retail. The co-founder Jim

Sagal put it perfectly in a recent

interview when he said, "Many retailers

look at an item and say, I'm selling

this for $10, but how could I sell it

for $11?" Costco looks at it and says,

"How can we get it to $9 and then later,

how do we get it down to $8?" But if

Costco is not making fat profit margins

on its products, where's the profit

coming from? If you shop at Costco, I

bet you can guess. Their real profit

driver is membership fees. As of last

year, Costco reported having $137

million members. Memberships range from

$65 for the gold star in business to

$130 for executive status. And unlike

the $1.50 wieners, these membership

prices have increased with inflation.

Now, I knew the membership fees were a

big part of Costco's business model

because I'd read about the company

before out of interest. But I didn't

realize just how staggering these stats

were until I did the research for this

video. The membership fees contribute

only about 2% of Costco's revenue, but

account for 73% of their gross profit.

Crazy. So, to connect the dots, cuz I

know I just threw a lot at you, Costco

keeps prices aggressively low, builds

trust with its razor thin markups, gets

you hooked on the experience, and then

makes the most of its profits from those

annual membership fees. Okay. Okay.

Super thin margins, low prices, but

still, Costco's revenue last year was

$254

billion. Once again, third largest

retailer in the world, only behind

Walmart and Amazon. So, they're moving

some serious volume. They must sell a

ton of different products, right? Wrong.

Again, most Costco locations only stock

around 3,700 different products, which

is so minuscule for how big these

warehouses are. Compared to a Walmart

Super Center, which sells about 140,000

different products, the strategy is

instead of overwhelming their customer

with so many different choices, they

choose one, two, three, maybe four

different brands to sell alongside their

private label version. And they sell it

in volume. And guess what? This gives

Costco extreme negotiating power. If the

shelf only has two spots and one of them

is already taken by Kirkland, that means

that every other brand is fighting for

that one remaining seat at the Costco

table. Needless to say, this gives

Costco an enormous amount of leverage.

Brands know that landing on the Costco

shelf can mean millions of dollars in

volume and long-term customer loyalty.

So, they're often willing to lower their

wholesale prices for Costco, create

better packaging formats, or even tweak

their formula just to make it in.

Another way Costco stays honest, they

don't charge these brands for the shelf

space once they're in, like many other

retailers do. If a brand is here, it's

because they presented the best deal to

Costco and earn their way in. Limited

selection also creates operational

efficiency behind the scenes. With fewer

products to manage, Costco can turn

inventory faster, negotiate better

shipping rates, reduce waste from

expired products, and simplify

everything from restocking to staff

training. So, while other retailers are

playing inventory Tetris by selling

thousands and thousands of SKs, Costco

is moving massive volume of the same

products over and over again. It is

retail efficiency at its finest. This

limited skew model and negotiating power

is something that we've seen before.

Trader Joe's stocks limited products to

avoid giving the customer decision

fatigue. Arowan has extreme negotiating

power since products have to pass an

extremely high bar of health to even be

stocked at the stores. I think of Costco

as sort of a combination of the two. So

to sum up Costco's business model at a

high level, you pay just to walk in the

door. Those membership fees create

stable recurring profit, which lets

Costco keep prices low, which builds

trust and loyalty within you, the

customer, which leads to bulk buying,

which gives Costco massive supplier

power. And this whole flywheel fuels a

sense of value and discipline around the

Costco brand that is pretty unmatched in

retail. And this isn't just an American

phenomenon. Costco has cracked the code

in 14 different countries by keeping its

core model intact while adapting to

local tastes. In Japan, you'll find

matcha KitKats in smaller bulk sizes for

smaller homes. In Korea, you'll find

Bulgi bake instead of chicken bake. I'm

probably pronouncing that so wrong.

Bulgi. I should have looked up the

pronunciation before this video. Bulgi.

Bulgi

in Canada. Poutine in the food court, of

course. And honestly, I want to go back

to Iceland just to see what Icelandic

things they have in the Costco that's

about 7 milesi south of Raikyc. Seems

like there's some fun stuff there. I

looked it up. But across all these

countries, same membership model, same

Kirkland quality, same concrete

aesthetic, but with enough local flavor

to feel authentically Costco no matter

where you are. You trust them to save

you money. They trust you to renew your

membership. Everybody wins. But there's

one more piece of the puzzle that we got

to double click on, and it's probably my

favorite part of their whole strategy

besides the hot dog. But my second

favorite part of the Costco strategy is

hiding in plain sight, and it might just

be their biggest unlock of all. Let's

talk about Kirkland. Costco's beloved

one-sizefits-all. Kirkland signature

private label brand didn't exist before

1995. Before that, it was kind of a

branding free-for-all. Costco had a

whole collection of madeup names across

a bunch of different products

categories. one brand for paper towels,

another for snacks, another for

stationery. They would just create a new

label whenever they launched a new

product, which is pretty standard in

retail to have a lot of different

private label brands. So, why did they

change to just Kirkland? In a recent

interview with the Wall Street Journal,

co-founder Jim Sagal shared the story

that sparked the Kirkland revolution. He

was visiting a warehouse and asked the

manager if a shipment of the Costco

private label brand legal notepads had

arrived. The manager said no. But when

Jim went to the back to check for

himself, he found the legal notepads

branded Pinnacle sitting right there.

The kicker, the manager didn't even

realize that Pinnacle was one of

Costco's brands. Cue the light bulb

moment. If people inside Costco didn't

even recognize their own private label

brands, how were customers supposed to

build brand trust or loyalty? So, Sagal

made the radical call to consolidate all

of their private label brands under one

master brand. One name, one standard,

one identity. Kirkland Signature named

after Costco's original headquarters in

Kirkland, Washington. This might seem

like the obvious move within the context

of that story. But at the time and even

now, it actually goes against every

playbook in retail. Successful

department stores at the time like Sears

were going in the opposite direction,

launching even more private label brands

to be able to target different

demographics and price points. Even

today, Target has over 45 different

private labels like a new day for their

clothing, Good and Gather for their

food, each with its own curated

aesthetic. Walmart even has over 20

private label brands. So, why do

companies do this? Well, there are a

number of reasons. One, multiple brands

can help segment identities and position

each brand a little bit differently to

appeal to different demographics. Two,

it can also help hedge reputational

risk. So, if a Target food product flop

happens, it doesn't taint your image of

Target's apparel line, let's say. But

Costco said, "Nope, one brand to rule

them all." And it has worked

spectacularly well. Today, Kirkland

Signature accounts for about a third of

Costco's revenue, generating $86 billion

just last year. That is more than

Proctor and Gamble alone, more than

Craft Time. It's a brand that customers

know, love, and most importantly trust.

But why is Kirkland so trusted? Because

when we think of private labels, I think

a lot of us think generic, cheaper,

slightly sad, lower quality knockoff of

the real thing. And this is where

Kirkland flips the script. Kirkland's

goal is not just to offer a lowerc cost

alternative. The goal has always been to

match or beat the level of quality on

name brands. And sometimes Kirkland is

the national brand in disguise. Some fun

examples. Kirkland batteries are made by

Duracell and they also sell Duracell.

Kirkland coffee famously manufactured by

Starbucks. There's been a long-standing

rumor that Kirkland vodka is just

rebottled Greygus. That one's been

debunked sadly, but the fact that it

holds up in a blind taste test against

Greygus, that's saying something. And

they don't sell it at this Costco, which

is lame, but I thought you guys should

know cuz Greygus gets talked about a

lot. And Costco doesn't try to bury the

Kirkland brand on the bottom shelves.

Nope. It is right there next to the name

brand version that you know. And in many

cases, customers choose Kirkland because

they trust it more. Here are some fun

facts and examples of Kirkland products

that have gained an extra cult

following. Kirkland is the largest

seller of cashews in the entire world.

Not Planters, not Blue Diamond,

Kirkland. Their nut game, famously

strong. They also sell $1 billion of

toilet paper every year. $1 billion. And

yes, there are Reddit threads comparing

the performance of Kirkland toilet paper

to Cottonell and Charmin Ultra. People

have opinions. The Kirkland protein

bars, which are basically Costco's

version of a Quest bar. Fitness

influencers love them.

Kirkland golf balls, which are so good

and so cheap that Tidalist actually sued

Costco, saying they must have copied

their provula after the balls from

Costco got so much praise from pro

golfers. Costco actually counter sued

Titalist and then it was settled out of

court. So, who knows? But, uh, those

must be some good balls. The Italian

olive oil that's actually made in Italy

and passes authenticity tests every

single year. the Kirkland Wine

Collection, which is produced by some

very reputable wineries in Napa and sold

for a fraction of the price. They don't

sell wine at this Costco. Once again,

kind of lame, but all of this builds

into something pretty rare. A private

label brand with a personality and a

very high level of quality. Kirkland

isn't the shadow brand. It's front and

center right there next to the name

brand. And for many Costco members, it's

one of the main reasons that they keep

coming back. They don't think discount.

They think this is probably the best

deal in the store. Kirkland's quality

and value is often cited as the number

one reason that shoppers renew their

Costco memberships year after year.

Crazy impressive stat to show for it.

Costco's membership renewal rate sits at

almost 93% in the US. That level of

loyal customer retention is a rate that

so many businesses could only dream of.

And you know what? Count me in as a

Kirkland stand. I can't think of any

other private label. Maybe Trader Joe's.

Definitely Trader Joe's where I'm super

stoked to see it. One of my friends

brought over a Kirkland bottle of wine

to my house for me a couple years ago. I

was thrilled to see it. My parents have

bought Kirkland everything since I was

the size of a little chicken nugget. I

love Kirkland now at 27. I loved it when

I was 10 and running around the wide

aisles and riding the shopping carts

with my brother. And I am sure I will

still love it when I'm 50, probably even

more. Which is a good segue into our

next section. Now that we know the

business model, we know the hot dog, we

know the private label playbook, how is

it that Costco in its stereotypically

boomer fashion in all of its concrete

glory still manages to be beloved by all

generations, young people, older people,

families, doomsday preppers, even Tik

Tockers. Let's talk about how Costco is

weirdly cool now and what that means for

the company's future. It makes perfect

sense to me why Trader Joe's is

especially popular with young people

with its playful, colorful signage, its

fun, quirky snacks, its famously super

friendly employees and Hawaiian shirts

and affordable prices. Costco, on the

other hand, is concrete. It's

fluorescent. It's no frills. It's not

exactly tick tock bait and yet it's

happening. Gen Z of all groups has

become one of Costco's fastest growing

customer segments. Of course, this is in

part because Gen Z are becoming adults

of grocery shopping age. But there's

more to it than that, and it's not just

the hot dog. With food prices still

elevated near the peak levels that we

saw in 2022, 2023, Jenz has gotten

creative. They're fighting inflationary

prices by buying in bulk and then

splitting the bill later with their

roommates, friends, and family. A recent

study by Advantage Solutions found that

nearly 40% of shoppers aged 25 to 34

report splitting bulk groceries. this

way with anecdotes from frat bros who

pile into a car together and do a weekly

run to Costco and then split the bill

later on via Venmo. It's kind of cute if

you think about it. But that's just one

piece of the puzzle. Costco's brand

image is changing, too. We know that

Costco has always been about delivering

a high-quality product at a good price,

but it seems that Gen Z is just now

especially catching on to that. I say

this as though I'm literally not Gen Z,

but I'm a boomer at heart. According to

a recent poll, Gen Z adults are more

frequently describing Costco with the

words premium, visionary, and customer

ccentric. In fact, Gen Z now views

Costco's brand as higher quality than

the general adult population does, which

is kind of amazing when you think about

the fact that Costco's vibe really seems

to cater to people with like four kids.

Also, when I said that Costco isn't

exactly Tik Tok bait, turns out kind of

actually is. A video by the deal guy

titled 10 new Costco deals you need to

buy in July 2025 posted 9 days ago 1.1

million views. Must be a crazy outlier,

right? Wait, what? What's that? Another

video by the deal guy titled 10 things

you should be buying at Costco in 2025

posted just 2 weeks before that other

one. Also 1.1 million views. Binging

with Babish trying every Kirkland

Signature Product. 1.6 million views in

1 month. And finally, Bobby Parish,

Costco shopping guide for 2025. 2.1

million views in 7 months. Yes, these

videos are being posted by huge channels

with millions of subscribers. But even

still, these Costco videos are

outperforming the other videos on those

channels. So, Costco has more cultural

cache than I think a lot of us give it

credit for, with its bulk grocery

reviews and shopping guides generating

millions of views. I don't know if you

guys find this part as interesting as I

do, but it's my job and I think it's fun

to find those outliers. And I think it's

so cool that Costco is one of them. Now,

a lesser discussed part of what I think

makes Costco so cool across generations

is its product strategy. Unlike Trader

Joe's, which deliberately cork

trendiness with its seasonal drops in

quirky snacks, Costco isn't trying to be

cool. But then you look around and

realize, is that Graza olive oil? Are

those Birkenstocks?

Is that Dyson? Costco is low-key kind of

cool and they've kind of mastered the

quiet slip-in of the trendy product next

to the generic thing. So, while the main

drivers that get people of all ages in

the door are highquality items at good

prices, the trusted Kirkland brand and

of course, it doesn't hurt that Costco

also does limited time runs of buzzy

specialty item brands that help create

that treasure hunt experience. It helps

drive urgency and excitement to get you

to go to Costco now instead of waiting

until next month. And it also creates

fun Costco haul videos. In this product

strategy, whether you're a costconcious

college student or, you know, a dad

feeding a family of five, I think they

hit the sweet spot between value,

discovery, and quality. And something

about them not trying to be cool just

makes them so cool. So, we've covered

the business model. We've covered the

Kirkland empire and the

multigenerational appeal. Here's the

million-dollar question, the $254

billion question. Can Costco keep this

magic going forever? Because in my

research, I did find some potential

challenges on the horizon. First up, the

online shopping revolution. While Amazon

and Walmart have gone allin on grocery

delivery, Costco has been, let's say,

thoughtfully cautious with their

e-commerce approach. They do offer some

same day delivery through Instacart and

2-day delivery on their site, but it's

clunky, it's limited, and it's clearly

not the main event. And maybe that's the

point because so much of the Costco

magic happens within the warehouse. The

treasure hunt, the free samples, the

impulse buys, that weird satisfaction of

lugging home a bunch of highquality golf

balls, I guess. How do you replicate

that digitally? But Gen Z and younger

millennials increasingly expect

convenience. They want their groceries

delivered. They want to be able to shop

on their phones. And they want it now.

In my opinion, Costco's challenge is

evolving their digital experience

without losing the warehouse magic that

drives loyalty. And then there's the

competition heating up on multiple

fronts. Sam's Club is investing heavily

in Scanand Go technology. Amazon Prime

offers a membership for roughly the same

price as a Costco membership, and

obviously they ship very, very quickly.

Even traditional grocerers are launching

better private labels in bulk options.

Plus, there are natural limits to

growth. Costco works best in suburban

markets where people have cars and

storage. These ideal locations are not

infinite, especially within the US

market, which is already saturated. But

here's why I'm not betting against

Costco. They have proven remarkably good

at evolving without changing their core

identity. The Kirkland brand alone is

worth billions. Their supplier

relationships are incredibly strong. And

that almost 93% renewal rate, that's not

just customers. That's a community of

people who genuinely love shopping here.

One more shout out for the hot dog. The

fact that they've kept this $1.50 for 40

years while everything else has inflated

tells you everything you need to know

about their discipline and long-term

thinking. They're not only chasing

quarterly profits. They're building

something that lasts. Will Costco look

the same in 10 years? Probably not. Will

it still be a place where you can trust

the quality, get genuine value, and walk

out with more than you planned? I'm

betting yes because good value delivered

with integrity never goes out of style

even if the delivery method evolves. So

yeah, on paper Costco sounds like dad

energy. No ads, no frrills, no music, no

convenient sizing, and yet it is one of

the most beloved and bulletproof

retailers on the planet. Because

underneath it all is a strategy that is

deceptively smart. Use discipline and

scale to earn trust and then double down

on that with every decision. That's why

people will drive across town for

Kirkland Cashews. Why they'll renew

their membership year after year at a

nearly 93% rate. And why Gen Z are

showing up in droves. It's not just a

store, it's a welloiled system. And if

there's one thing that Costco does not

sell, it's shortcuts. Question for you.

What part of the Costco business do you

find the most interesting? And if you're

a Costco shopper, what's your ultimate

purchase? I read every single comment,

so let me know down below. And if you

enjoyed this video, please give it a

thumbs up. Subscribe for more videos

like this. They take a long time to

research and to write, but I really

enjoy it. So anyways, thank you guys for

watching and until next time, turtle

out.

No,

no, that's my hot dog. Thank you very

much.

Hell yeah. Nut game. Thought it was

funny. I make another double onandra

later about the golf balls. So naughty

Kirkland.

Perfect. Does it look ladylike

wine? Vodka.

Is it Greyg goose? Who's to say not sell

its shortcuts?

Hell yeah. If I sat down,

should I sit?

I'm like

Kirkland

quality. One more

little leg pop.

Can you tell I've been hitting the gym?

Bet you can.

Can you see how big it is? This is

absurd. It's so soft. Oh, I love

squishallows.

Okay, nice. That's perfect. Rotisserie

thing in your cart. Am I getting too

silly? Okay.

Whoa, she's crazy. Okay, moving on.

I have a whole new level of confidence

in this outfit.

Uh,

okay. Ready.

163.

Okay. Kirkland. Kirkland. Kirkland.

Kirkland.

Bless you. I could sit up here.

Does this look good?

Sometimes I'm like, how is this my job?

And look who I ran into. A subscriber at

Costco. Look, she's the best.

Oh, you're the best. Thank you so much.

Let's get a hot dog. Hey, if you liked

this video, I bet my bottom $1.50 that

you would also like this video. Check it

out.

[Music]

Key Vocabulary

Vocabulary	Meanings
bulk /bʌlk/ B1	noun - a large quantity or volume
strategy /ˈstrætɪdʒi/ B2	noun - a plan of action designed to achieve a long-term goal
private label /ˈpraɪvət ˈleɪbəl/ C1	noun - a brand owned by a retailer and exclusive to their stores
membership /ˈmɛmbərʃɪp/ B1	noun - the state of being a member of an organization
trust /trʌst/ A2	noun - firm belief in the reliability of someone or something
impulse /ˈɪmpʌls/ B2	noun - a sudden desire or urge to do something
renewal /rɪˈnuːəl/ B2	noun - the act of extending or replacing something
treasure /ˈtrɛʒər/ A2	noun - something of great value
leverage /ˈlɛvərɪdʒ/ C1	noun - the power to influence a situation to one's advantage
discipline /ˈdɪsəplɪn/ B2	noun - the practice of training people to obey rules
quality /ˈkwɒlɪti/ A2	noun - the standard of something as measured against other things
value /ˈvæljuː/ A2	noun - the importance or worth of something
digital /ˈdɪdʒɪtl/ B1	adjective - relating to computer technology
evolution /ˌiːvəˈluːʃən/ B2	noun - the process of developing and changing over time