THE ANTI-STORE: Costco, Jet, and Price Club

I was listening to one of the more recent Planet Money podcasts on NPR the other day called The Anti-Store which actually puts some blatant, yet inexplicable tricks Costco implements, into comprehensible and conversational language.  Robert Smith and Jacob Goldstein, who hosted the podcast, argued that at heart, Costco is a cold hearted store which utilizes some pretty sly, but profitable business strategies to get the most from their customers while expending less.  But this story, which focuses primarily on Costco and Jet, did not start with these two major companies.  It actually began in 1976 with a man named Robert Price and his company, Price Club.  

Robert Price started Price Club in 1976, which is similar to Costco.  It was designed for small businesses to shop at and there was a $25 membership fee that must be paid for the luxury of shopping there.  After its first couple months of opening, Price Club was failing.  The small businesses just did not shop there.  Price decided, in hopes of saving his business, to open up Price Club to people who wanted to shop for themselves and avoid limiting the warehouse to small businesses only.  And right there, that got the ball rolling for Price Club.

The founder of Costco was originally an employee of Price Club who left to start Costco. His name was James Sinegal.  Costco has many similar values to Price Club, including a membership fees and targeting small businesses.  The remainder of this podcast explained

some of the fundamentals of how Costco and Price Club are organized and why the companies chose to run themselves in their current fashion.

Obviously, in order to shop at Costco, you need a membership, which costs $55 annually.  Robert Smith and Jacob Goldstein explain how this membership acts kind of like a pass to an “exclusive” club, even though hundreds of millions of people own this membership.  Just because millions of people have this “exclusive” membership, Costco does not abandon this “exclusive” feeling after customers pay the membership fee: there’s always someone at the warehouse entrance who asks to see your membership card.  For some people, having something to show and justify themselves feels “exclusive.”  

Then you begin shopping.  Have you ever noticed how Costco never has signs at the ends of aisles? Robert Price says it’s a trick Price Club also used.  In The Anti-Store, Smith and Goldstein give the example of needing plastic bags.  Since there are no aisle signs and few employees walking around the store to offer assistance, some people end up walking up and down all the aisles looking for plastic bags.  Price says the business’s hope in setting up the warehouse as explained is to inveigle customers to pick up things they don’t actually need. However, walking by it may have sparked an interest of two, and most customers leave with

Proof of my cashew purchase;)

little extra things they might not have initially put on their shopping list.  I know that happened to my family last week.  We were going to Costco to purchase a couple things: paper towels, tissues, towels and I believe Lysol.  I specifically remembering walking down the candy aisle to the checkout line [ though we seldom purchase candy] and stopping because my dad saw something yummy to eat: cashews covered in vanilla creme with dark chocolate coating and flaked coconuts.   I know for certain those cashews were not on our shopping list, yet walking down that aisle and seeing them lured my family to purchase them.  Thumbs up for Costco.

Let's continue on with Robert Smith and Jacob Goldstein's example of shopping for plastic bags at Costco.  You've finally found the plastic bags after walking up and down just about every aisle and you're looking at the selection of plastic bags to purchase.  This is no retail store that has 15 plastic bag options.  When you go to Costco, you’re asking for limited selection.  You may find only about three different types of plastic bags at Costco and usually their small, medium and large, not Ziploc, Up and Up, Hefty etc.  

At the checkout line.  Costco does not provide bags for your purchased items.  Robert Price says that this is another trick that Costco uses in order to promote themselves as a “mysterious warehouse With the cement floors and bright lighting”.  Again, this leads us back to that idea of  appearing “exclusive.”  in other words Costco does not want to look like a typical retail store.  Not only does providing no bags allow Costco to appear less like an ordinary retail store, but it also saves them a lot of money.  As I mentioned before they're all so few employees and Costco who walk around.  When my family and I go, we usually see a couple of employees folding clothing in the clothing aisle but besides that you will come upon very few.  This is another tactic that Costco utilizes to lower their costs.  Both hiring employees and giving bags costs money that could otherwise be saved.

Now we get to the part of the podcast that I find most shocking as a listener. This is another money-saving strategy that continues to evolve with Costco.  And it is this strategy:  Costco wants its customers to come less often.  They would rather a customer spend $400 once a month rather than $100 every week because it costs money for Costco to give you a parking space,  it costs money for Costco to hire someone to check your membership at the entrance,  it costs money for Costco to validate your credit card every week, and it costs money for Costco to hire people to work at the checkout lines. So one of their business mottos is actually a question of how can we encourage customers to come less often.  For me, that very interesting.  I'm now seeing how Costco is really one of those companies that values every cent it can save on store maintenance,  and every dollar it can gain off customers.

The rest of the podcast is primarily about an online warehouse called Jet and it's business strategies for saving money on shipping returns. Long story short,  the more you buy on Jet the cheaper things in your shopping cart become because it saves Jet money instead of having to send something different to your address everyday. Instead, they can send it all in one shipment.  Here’s what I’m sensing from this: even if a company says you’re getting “free-shipping”, you’re really not because the shipping cost is embedded in the products price;  you're really only saving extra money you would have to pay if it was not free shipping, or money for shipping on top of money for shipping.  

Jet also has an interesting feature on its website.  If you click on a no return button, you save additional money.  To me, that suggests the shipping price you pay for the delivery of a product also includes the shipping price for the return of an item you're not satisfied with.

Whew! That was a long post!  But hopefully, that gives you an fairly good synopsis of The Anti-Store podcast from this past week from Planet Money on NPR news.  If you’d like to listen to it for yourself, I’ve included the link below.  

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Link to The Anti-Store.

A lot happens in three weeks

The days are perfect right now.  I don’t think I could ask for more, the sun setting earlier, the afternoons cooler, the angle of the sun lower.  This past week, I’ve noticed the weather, ever-so-slightly changing, changing to my taste.  And then, as I’m prepared for, will change dramatically to the infamous season of New England: winter.  

And it was not like this three weeks ago, or even last week.  Three weeks ago, I could go out and play tennis after dinner until probably around 8:10.  This past Monday, when I asked my Amazon Echo what time the sun would set, it replied with 7:38.  Yesterday afternoon, before I was going to take my daily walk, I questioned whether I should go since it was barely 5 PM and I was afraid it would be too hot and sunny.  Glad I went, yesterday’s 5 PM felt like a 6:30 PM of two weeks ago.  The seasons are changing, and for me, this time of year is my favorite.  I’m still on vacation, yet it’s just over one week before the opening of school, and that anxiety is keeping the last couple days of summer spry. The weather is pleasant and it’s not too sunny.  

But, as I’m prepared for, time will pass and what is “paradise” for me will metamorphosize seemingly overnight into the season I call winter, preceded by fall.  As I’m realizing, winter will bring about a new year, 2018, of which I will probably spend the first three months trying to remember to write on my homework instead of 2017.  I suppose I will have to remember it’s 2018 faster, as I’m also realizing a lot happens in three weeks and I have no time to spare.

Learning from others

Yesterday I went to Boston with my close friend and afterwards, we took the train back to her house.  Yesterday, I also learned many interesting things through going to my friend’s house.  It’s making me realize how much we grow each time we modify our schedules, do something out of the blue, or do something just for kicks.  When we make slight changes or deviate from our daily routine, we simultaneously learn from those experiences.  My friend and I are similar and different.  We are both Asian-American, play tennis, have trouble understanding code, and love to talk about e.v.e.r.y.t.h.i.n.g.  However, the culture and vibe in our households are very different.  Here’s where there’s space to learn from each other.  

1. When boiling water for steaming food, fill the pot up ¼ of the way because it takes less time to start boiling and gives the same steaming effect as if the pot were completely full of water. I’ve never thought about that and it’s a tip my friend’s brother told me, though I admit I’m not much of a cook: generously stated, it’s an area with lots of room to improve and grow.  And there’s the first bit of information to fill that space.
2. There are such things as grapefruit spoons.  I’ve always eaten grapefruits like oranges, peeling the outer skin off, then eating the inside.  However, that method of eating grapefruits results in bitterness, since the white layer in between the skin and the actual fruit is bitter.  I was given a grapefruit spoon, which is shaped like a pizza slice, but has ridges on the edges for scooping out slices of grapefruit.  
3. My friend’s brother [whom I’m also close with from tennis camp] told me he always thought I was an odd kid because I, according to him, have “a loner attitude” but I’m not a loner.  He told me he noticed that trait when we were at camp together around 5 years ago when he first began to know me.  Back then I refrained from social media and smartphone engagement because I thought constantly chatting and texting with friends would be “distracting.”  Nevertheless, he observed me to be one of the kids at camp who was always surrounded by friends.  Contradicting and odd.  
4. Compost grown plants really are healthier [and bigger].  In their backyard, my friend’s mother grows vegetables like peppers, green beans and scallions. She composts all food that is unfinished and uses the new soil as fertilizer.  My friend showed me the scallions that were growing in her backyard and I was astonished at their size.  The shortest scallions was probably over 2 feet tall and compared to the scallions that I usually eat, they were a solid 3-4 times longer and thicker.  My friend likes to call them “scallions on steroids.”
5. I’m different than who I was.  My friend’s brother told me that.  I have a smartphone now, thanks to my changing views about the power of social media and connectivity.  I know my personality may be different and I am differently more open and outgoing.

Visiting my friend’s house yesterday has brought me a different perspective of cooking, family, and myself.  And here’s a solid example of how we can learn and grow from each other.  When we explore other people’s lifestyles, it opens ourselves up to the fact that we don’t know everything and there’s much to be learned. An example? I’ve never even heard of a grapefruit spoon until yesterday!

A big shoutout to Jackie and Jamie:  I’m thankful for every minute we’re together.

1984 Thoughts

I’m almost finished reading 1984 by George Orwell and one thought that I’ve constantly been thinking about throughout the entirety of the novel is are we complicating life?

The human race has established everything that we know of today, from a money system, to various languages, to our own entitled opinions.  In 1984, the totalitarian government system denies people the right to their own opinions and to ensure this, they have ThoughtPolice.  People in Oceania have their own language called Newspeak, whose goal is to cut out as many words from the language as possible.  People of the Party argue that it’s too complicated having too many words.  Why say “bad” when you could just say “ungood”?  History has also stopped its own tracks. Every historic record, article, newspaper and magazine is updated to fit was actually happens.  For example, there are three states: Eastasia, Eurasia, and Oceania.  Per sey that Oceania [which is where the story takes place] was in a war with Eurasia and were allied with Eastasia. News articles and magazines are obviously all glorifying the war and writing about how hard Oceania is fighting.  But suddenly one day, Oceania declares war on its ally, Eastasia and becomes allied with Eurasia.  Then, there is a special group of people, the Ministry of Truth, who comes along and erases Oceania’s history of being allied with Eastasia by changing every single article in the past that contains information of the sort.  Now, every single article about the Eastasia/Oceania alliance has been changed to the Eurasia/Oceania alliance.  History is erasing itself in 1984, to the extent where what happened in the past is completely untraceable.  

Everything in Oceania has been predesignated and everything has been set in stone.  People lead monotonous and clueless lives.  If people follow the rules of Oceania then they will be able to live.  Otherwise, they will be punished.  

What intrigues me is how simple life in Oceania is illustrated to be.  People are constantly monitored by telescreens which can see and hear everything you say.  As long as you abide by the principles of Oceania, everything else remains fairly simple.  There is no need to worry about finances, as everyone in the whole state is poor; there is no where poor financial management could cause you to drop.  There is no need to worry about traveling, since you can’t travel anywhere.  Education is not an issue to worry about, since everyone receives the same education and most of the time, children report their parents to the ThoughtPolice.  Oceania is simple.  I can’t help but notice how much more sophistication there is in my life.  I can’t help but wonder how much more culture and freedom there is in the life I live.  I’m grateful for human establishment and progression.  I’ve been given the gift of freedom, space to grow as a result.  But sometimes, I can’t help but muse how life would be different if society were run upon a simpler system.   

Stability

I suppose I’m anticipating and optimistically waiting for the day in which life will become stable for me.  My interests, the school I attend, my ballistic emotions, my daily schedule, sporadic doctor/orthodontist appointments are causing havoc in my life.  I like stability and I value control.  I don’t know why, but it’s kind of like how I take my daily 2 mile walk everyday to town and back.  

I’m noticing how life will always remain “unstable” in the eyes of a management freak like myself.  Right now I’m worrying about high school, where I’m going to go to college, when I’m going to finally get my braces off, if I’m going to pass the driver’s test and all the little details like that.  But the truth is, there’s a life beyond college, something I’ve failed to look at.  

Here comes the cascade of things I’ll have to worry about after college [and I’m barely in high school].  I’ll probably need to go to business school [drats, student loans?], find a good paying job afterwards [this is so important, determines the quality of my living, access to healthcare etc.], manage my money well [looks like I’ll need to download an app to help me track where my money goes], understand credit cards  [and which credit card to use where so as to accrue to maximum return and benefits for being a cardholder] and then, before you know it, it’s all about setting aside money for emergencies, and planning a retirement.  

I don't exactly know what I'm looking for. I suppose I'm looking for a life that I have constructed strategically enough so that I can go out and do risky things [like start a company, travel around the world] without having to worry about whether I have the resources to support myself. I think I'm also looking for a balanced and consistent schedule, though through the power of my parents example, I'm noticing that does tend to tire.

Stability is interesting.  I like to think I lead to a stable life right now, meaning I know where I’m going.  In retrospect, this year feels more balanced than last year.  Last year, I felt I was on a sort of cliff, not knowing what high school I would be attending.  Metaphorically speaking, it was like drifting in a river in a valley.  My job was to find a bank on one side to climb upon.  Now that I’m on that bank, life feels more stable.  

Nevertheless looking ahead, I see more banks and more rivers I’m going to fall into, just these rivers are not high school.  They’re college, applying for jobs, and managing where my money goes.  Stability.  I continue to hope I’ll find it someday, but maybe I’ll simply have to change the lenses which I’m looking through and redefine what it means to be “stable”.  

In your way of thinking

Grand Teton National Park

"Very little is needed to make a happy life; it is all within yourself, in your way of thinking."  ~Marcus Aurelius 

Three Things from Tennis This Week

I continue to play more and more tennis throughout the summer and after taking a 12 day break for Yellowstone, this week has involved recovery of many of my strokes.  But there was also a lot of positive lecturing from the coaches, would had just returned from coaching a big college-style national tournament for 18s.  Why does each lesson, moral, expectation and example I grasp through tennis tie ever more closely to my values in life?

1. You’re never going to walk onto the court with everything feeling good. Alex told us that.  And the best solution is to work around what’s not feeling good by exercising and empowering what does feel good.  Today in fact, I played a match, losing 7-5, 3-6, and 7-10 in the tiebreaker with a broken forehand pressure shot.  I had several well played setups which led my opponent to return some shorter, easily attackable shots which I put away into the net and out long several times.  While I was playing, I kept thinking to myself, why is my forehand not working!  It was frustrating.  My strongest, most aggressive shot, the one that I loved to win points with, the one that boosted my confidence wasn’t winning me the points I’d set it up to win.  And undoubtedly, I was forced to change my play and utilize my backhand more.  I credit that slight shift to not losing 10-0 in the tiebreaker.
2. If something’s not working, find another way to win.  There’s not one way to be successful, in a game and in life. Enough said.  
3. Find purpose in every shot.  Bryce gave us an example of finding purpose from when he was coaching Sectionals.  The number 1 player from New England was playing against another player from a different section of the US.  He lost the first set 6-0.  Bryce talked to this player and asked, what’s your purpose in each shot? With a slight adjustment to his backhand, he managed to win the next two set 6-1, 6-1, winning the match.  Every shot should be hit with some purpose, showing that the player is thinking ahead and anticipating what may happen next. I hope to have insight and purpose in everything I do. At Andover next year especially, when there is a 24 page list of clubs to choose from knowing there always seems to be a paucity of time, when there is are so many organizations I want to be a part of and courses I want to study, I know that finding a long term, ultimate goal will help me make smarter, short term decisions with purpose in the present.

The more I play tennis, the more I’m beginning to feel that tennis is an snapshot of how I act in stressful, high stake moments in my life.  Tennis exercises my ability to remain calm under those circumstances.  Tennis is life in a short, competitive period of time.  Tennis is teaching me life, as I’m seeing how strongly each stroke, each error and each moment I feel like I’m going to lose is like a mini representation of a setback or a choice I’m inevitably going to make in later years.