How Costco became the king of bulk buying starting out selling only to businesses out of an old airplane hangar

FedMart was founded by entrepreneur Sol Price. Jim Sinegal started his career at FedMart and thought of Price as a mentor.

The pair developed and refined the wholesale club strategy together at FedMart, which was one of the first general merchandise retailers to expand into other categories like groceries, gasoline, and prescription drugs.

"I guess I've stolen – I actually prefer the word 'borrowed' – as many ideas from Sol Price as from anybody else in the business," Walton later said.

Price wanted his store to be a wholesale supplier for small businesses, and he opened his first location in an old aircraft hangar that was once used by aviator Howard Hughes.

The basic concept across each company was the same: shoppers pay a fee in order to gain access to the bargain pricing. In each case, the business relies on membership fees more than product markups to earn a profit.

In the beginning, non-members could shop as long as they paid a 5% surcharge on their purchases. There are still a few ways to shop at Costco without a membership. 

Costco became a publicly traded company in 1985, initially offering shares for $10. Due to several stock splits, one initial Costco share would be six today, worth a total of more than $3,200.

Price Club was largely in the Southwest, centered in San Diego, while Arkansas-based Sam's Club had the Midwest and Southeast, and Costco took the Northwest, headquartered in the Seattle area.

Even today, Costco only carries around 4,000 unique products in its assortment — referenced by stock-keeping-unit codes or SKUs — while typical supermarkets carry 30,000 or more.

Memberships from each brand were honored by the other.

A few remaining Price Club locations were rebranded to Costco at this time as well.

That year the company ranked ninth among the world's largest retailers.

Costco also opened its fifth Business Center that year, a concept that caters more to small business owners than to household shoppers.

Sinegal continued to serve as Company Advisor and Director, ultimately retiring from the Board in 2018.

Jelinek was in charge of opening Costco's sixth location and helped the company expand in Nevada and California. As vice president of merchandising oversaw a range of priorities including e-commerce, foods, and pharmacy.

Walmart made more than $600 billion in worldwide retail sales in 2022, followed by Amazon at $343 billion, and Costco at $217 billion, per the National Retail Federation.

Costco has made more than $237.7 billion in revenue for the fiscal year.

"When we load them on the site, they're typically gone within a few hours and we limit two per member," Galanti said on the fourth-quarter earnings call in September.

Jelinek handed over leadership of the wholesale club to Ron Vachris, a 40-year employee of the company who had served as the company's president and chief operating officer since 2022.

A 40-year employee, Vachris started as a forklift driver at Costco's predecessor, Price Club, and has since worked in pretty much every area of the company.

"While I can't promise to be able to match the humor that Richard Galanti has become famous for, I can promise the same level of open dialogue and transparency you've come to expect," incoming CFO Gary Millerchip said during his first call in the role. "Oh, and to clear up some recent media speculation I also want to confirm the $1.50 hot dog price is safe."