Costco Wholesale Corporation

Company

Costco wholesale corporation is the second largest retailer in the world. The company firstly adopted the membership warehouse concept in 1976, which is significantly successful. At the end of 2016, the company has nearly 750 warehouses around the world, and more than 225,000 employees employed in nine countries. Costco also operates its business online in certain countries, which provides convenience for members to shop. Costco sells variety of products in bulk size to different types of members, and every member must pay for his/her annual membership fee.

Service delivery system design

Costco has 94 warehouses in Canada, and there are 14 warehouses in British Columbia. The locations are very convenient for members or customers to shop. Costco designs that each warehouse will have an average warehouse space of square foot 144,000. This is efficient for Costco to handle and control its merchandises. Even though each warehouse has only 3,700 inventories, Costco wants to have a high inventory turnover. Every Costco’s parking lot is closed to the warehouse, and it’s convenient for shoppers to park.

The service blueprint illustrates the whole process of how a customer shops in the store. A new customer will need to apply for a membership account before shopping. The customer must provide his/her personal information and government issued ID to the staff in order to register. After the staff verifies the information, he/she can create an account for the customer. Customer becomes the member of Costco and is ready to shop. During the shopping time, if the member is not sure where the products locate, he/she can go ask our staff for help. Members should line up for check out after they finish shopping. Line-up time is varied due to different situations. Members may need to wait more than 5 minutes. Once a cashier scans all the merchandises, member is ready to show its membership card to our cashier. A cashier must verify the ID, then he /she accept member’s payment. If the member decides to pay by cheque, he/she needs to show his/her government issued ID to our cashier for identification purpose. Once cleared, our cashier can accept the payment. Before leaving the warehouse, members may need to provide their receipts to our staff in order to check the payments are charged correctly.

Service encounter design

When service upset occurs, a member or customer should go to customer service counter to address his/her concerns. After a staff understands the issue is not that serious, he/she may have rights to deal with it without informing his/her manager. Costco promises to all customers that if they are dissatisfied about the service, membership fee will fully refund to them. If members are dissatisfied about the products, Costco guarantees that most products can be returned and refunded in full. However, members are responsible to purchase the damaged products caused by them.

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