Best Stock to Buy Right Now: Costco vs. Amazon
Costco Wholesale (NASDAQ: COST) and Amazon (NASDAQ: AMZN) are both categorized as retail stocks, but their varied business models make for some challenging comparisons when trying to determine which is the better investment.
One commonality is that both companies are leaders in their respective areas of retail (Costco leads the wholesale brick-and-mortar sector and Amazon is the king of e-commerce). Costco has vastly expanded its online presence in recent years so some comparisons are getting easier. Likewise, Amazon is building a position in grocery stores with its subsidiary Whole Foods.
One significant commonality is that they both use a subscription-based model to increase sales and encourage brand loyalty. Costco has found considerable success in offering an annual membership for access to its super competitive product pricing. Amazon's Prime membership gives members access to cheaper and more efficient shipping (as well as other perks). Both companies boast an impressive renewal rate on these memberships. These subscription models pave the way for reliable growth over the long term, helping both companies worry less about product sales and more about membership growth.
Source Fool.com
