Coin Press - COSTCO profits from Fees

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COSTCO profits from Fees

Costco’s cavernous warehouses and legendary bargain bins hide an unusual business secret: the company makes surprisingly little money from the products rolling through its tills. Instead, the bulk of its earnings come from selling the right to shop there. Shoppers pay annual fees – US$65 for a basic membership or US$130 for an executive tier – and those dues power almost the entire enterprise. Costco’s chief executive has even remarked that the most important item the retailer sells isn’t a giant jar of mayonnaise but the membership card itself.

A Subscription Model in Disguise
While rival supermarkets mark up goods by 25 % to 50 %, Costco keeps its average merchandise markup at around 11 %, essentially passing most of the savings to customers. After wages and utilities are accounted for, the retailer retains only a fraction of its sales as profit. In its 2025 fiscal year the company generated roughly US$270 billion in net sales but just over US$5 billion in operating income before taxes. What makes the model work are those membership dues. More than 80 million paid memberships produced about US$5.3 billion in revenue in the year ending August 2025, a figure that was almost pure profit. Renewal rates remain extraordinarily high – above 92 % in the United States and nearly 90 % globally. In essence, the fee income covers Costco’s overhead, allowing it to sell goods at razor‑thin margins and still generate solid earnings.

Winning Loyalty Through Value
The club’s low prices and quality goods have cultivated a near‑cult following. Perks such as the US$1.50 hot dog and soda combo or the US$5 rotisserie chicken often cost the company money, yet they draw in shoppers who fill their carts with other items. Costco’s private‑label Kirkland Signature line also delivers savings of 15–20 % compared with national brands. Employees earn comparatively high wages and enjoy generous benefits, fostering a customer‑friendly culture. The result is a virtuous cycle: low prices attract members, high renewal rates give Costco scale, and scale enables even lower prices.

Adjusting the Membership Formula
As inflation and supply-chain challenges have pushed costs higher, Costco has nudged up its dues for the first time in years. Since September 2024 the basic fee has risen by about US$5 and the executive tier by US$10. Even so, members continue to renew at elevated rates. Management views the current dip in global renewal rates – down to around 89.8 % because of a surge in younger, digitally acquired members – as temporary. Fee income rose 14 % year on year in the fourth quarter of 2024 to US$1.72 billion, underscoring the resilience of the subscription model.

Costco has also tightened enforcement of its club rules. To prevent freeloading, store entrances now require members to scan their cards or smartphone QR codes. The company even stopped selling the famous food‑court hot dog combo to non‑members. In September 2025 a new, controversial policy granted executive members exclusive early shopping hours on weekdays and weekends. Although fewer than half of cardholders belong to this tier, they accounted for more than 74 % of net sales in the fourth quarter. The perk has added roughly 1 % to weekly U.S. sales and encouraged some members to upgrade.

Expansion and E‑Commerce
The warehouse chain isn’t standing still. Costco operated 914 warehouses worldwide at the end of August 2025 and plans to grow to around 944 by the end of fiscal 2026. Digital sales rose more than 13 % year on year, with online apparel and electronics leading the way. Though e‑commerce margins are slimmer and tariffs remain a concern, management believes its membership base and private‑label strategy provide a buffer against volatility. The Kirkland brand, which now generates more revenue than some famous apparel labels, continues to strengthen loyalty.

Risks and Outlook
Relying on recurring fees does carry risks. A prolonged economic slowdown could dampen renewals and spending, and younger customers acquired through promotions or online sign‑ups may prove less loyal. Expansion comes with costs that squeezed operating margins to around 2.9 % in mid‑2025. Nevertheless, the company’s net income climbed to US$8.1 billion in fiscal 2025. Executives argue that as long as Costco maintains its value proposition and treats employees well, members will keep paying for the privilege to shop. In the words of the company’s leader, culture is a business strategy, and the warehouse club will continue to prioritise the membership card over the shopping cart.

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Long live Ukraine - Хай живе Україна - Да здравствует Украина

Es lebe die Ukraine - Да здравствует Украина - Long live Ukraine - Хай живе Україна - Nech žije Ukrajina - Länge leve Ukraina - תחי אוקראינה - Lang leve Oekraïne - Да живее Украйна - Elagu Ukraina - Kauan eläköön Ukraina - Vive l'Ukraine - Ζήτω η Ουκρανία - 乌克兰万岁 - Viva Ucrania - Ať žije Ukrajina - Çok yaşa Ukrayna - Viva a Ucrânia - Trăiască Ucraina - ウクライナ万歳 - Tegyvuoja Ukraina - Lai dzīvo Ukraina - Viva l'Ucraina - Hidup Ukraina - تحيا أوكرانيا - Vivat Ucraina - ขอให้ยูเครนจงเจริญ - Ucraina muôn năm - ژوندی دی وی اوکراین - Yashasin Ukraina - Озак яшә Украина - Živjela Ukrajina - 우크라이나 만세 - Mabuhay ang Ukraine - Lenge leve Ukraina - Nyob ntev Ukraine - Да живее Украина - გაუმარჯოს უკრაინას - Hidup Ukraine - Vivu Ukrainio - Længe leve Ukraine - Živjela Ukrajina - Жыве Украіна - Yaşasın Ukrayna - Lengi lifi Úkraína - Lank lewe die Oekraïne

Stargate project, Trump and the AI war...

In a dramatic return to the global political stage, former President Donald J. Trump, as the current 47th President of the United States of America, has unveiled his latest initiative, the so-called ‘Stargate Project,’ in a bid to cement the United States’ dominance in artificial intelligence and outpace China’s meteoric rise in the field. The newly announced programme, cloaked in patriotic rhetoric and ambitious targets, is already stirring intense debate over the future of technological competition between the world’s two largest economies.According to preliminary statements from Trump’s team, the Stargate Project will consolidate the efforts of leading American tech conglomerates, defence contractors, and research universities under a centralised framework. The former president, who has long championed American exceptionalism, claims this approach will provide the United States with a decisive advantage, enabling rapid breakthroughs in cutting-edge AI applications ranging from military strategy to commercial innovation.“America must remain the global leader in technology—no ifs, no buts,” Trump declared at a recent press conference. “China has been trying to surpass us in AI, but with this new project, we will make sure the future remains ours.”Details regarding funding and governance remain scarce, but early indications suggest the initiative will rely heavily on public-private partnerships, tax incentives for research and development, and collaboration with high-profile venture capital firms. Skeptics, however, warn that the endeavour could fan the flames of an increasingly militarised AI race, raising ethical concerns about surveillance, automation of warfare, and data privacy. Critics also question whether the initiative can deliver on its lofty promises, especially in the face of existing economic and geopolitical pressures.Yet for its supporters, the Stargate Project serves as a rallying cry for renewed American leadership and an antidote to worries over China’s technological ascendancy. Proponents argue that accelerating AI research is paramount if the United States wishes to preserve not just military supremacy, but also the economic and cultural influence that has typified its global role for decades.Whether this bold project will succeed—or if it will devolve into a symbolic gesture—remains to be seen. What is certain, however, is that the Stargate Project has already reignited debate about how best to safeguard America’s strategic future and maintain the balance of power in the fast-evolving arena of artificial intelligence.

China’s cartel lifeline

China is not keeping Mexico’s drug cartels alive through a formal alliance, a military pact or an openly declared policy. The reality is more diffuse and, in operational terms, more useful. China-linked chemical suppliers, commercial intermediaries and underground banking networks have become crucial parts of the infrastructure that allows Mexican criminal organisations to manufacture synthetic drugs at scale, move them towards the United States and recycle the proceeds with remarkable speed. The relationship is not a single organisation. It is a market in which every participant solves a problem for somebody else.That distinction matters. There is no publicly demonstrated command structure in which Beijing directs the Sinaloa Cartel or the Cartel de Jalisco Nueva Generación. Nor is every Chinese chemical company, exporter, student, business owner or currency broker involved in crime. Yet the available evidence shows that actors based in China or connected to Chinese commercial and underground banking systems have become indispensable enablers of Mexico’s synthetic-drug economy. They supply ingredients, reduce financial friction and provide the cartels with a global capacity that Mexican organisations could not reproduce as cheaply or efficiently on their own. The phrase saving the cartels is therefore provocative, but not meaningless. It describes an economic function rather than a political alliance.An industrial supply chain, not a secret pactThe modern fentanyl trade is less dependent on farmland than the heroin and cocaine businesses that preceded it. Synthetic drugs can be produced close to their final market, their potency makes transport exceptionally profitable, and their chemistry can be adjusted when a particular substance is banned. That has changed the balance of power inside organised crime. Access to chemicals, expertise, equipment and finance now matters as much as control over fields or remote trafficking corridors. When China placed fentanyl-related substances under class-wide control in 2019, the trade did not disappear. It changed form. Direct exports of finished fentanyl became more difficult, while Mexican organisations expanded their own synthesis using imported precursor and pre-precursor chemicals. The business moved one step upstream into the vast international chemical market, where many compounds have legitimate industrial or pharmaceutical uses and where criminal diversion can be concealed behind intermediaries, false descriptions, altered customs codes and shipments routed through third countries.Mexican brokers and cartel-linked procurement specialists search for suppliers, negotiate prices and arrange delivery through Pacific ports, air cargo, courier services and parcel networks. Some chemicals enter Mexico directly. Others pass through the United States or additional transit jurisdictions before reaching clandestine laboratories. Suppliers can switch to closely related compounds when regulators schedule a specific substance, leaving enforcement agencies trapped in a recurring race between chemical innovation and legal control. Not every company in the chain necessarily knows the ultimate destination or intended use of a shipment. That ambiguity is one reason the system is resilient. At the same time, recent prosecutions have described sellers who allegedly marketed chemicals for narcotics production, discussed concealment methods, accepted digital payments and tailored products to the requirements of traffickers. The supply chain ranges from wilful criminal partnership to negligent compliance and the exploitation of ordinary trade.Once the chemicals arrive, Mexican groups provide the violent and logistical layer. They operate laboratories, recruit chemists, press counterfeit tablets, move bulk powder and use established smuggling networks to cross the US border. The Sinaloa Cartel and CJNG remain the most important organisations in this market, although splinter groups, regional allies and independent brokers increasingly participate. The result is not a simple China-to-Mexico pipeline, but an adaptive commercial web.The financial machine behind the narcotics tradeChemicals are only half of the story. A cartel that cannot move, convert and reinvest its earnings is a cartel that cannot survive. This is where Chinese underground banking and money-laundering networks have become especially valuable. Mexican organisations accumulate enormous quantities of dollars from retail and wholesale drug sales in the United States. Physically moving that cash across the border is expensive and vulnerable to seizure. Conventional bank transfers create records and require explanations. Traditional laundering networks charge substantial fees because they assume serious legal and operational risk.At the same time, many Chinese citizens and businesses seek access to dollars outside China, whether to buy property, pay tuition, acquire luxury goods or move wealth beyond the country’s strict foreign-exchange controls. Most of those customers are not drug traffickers. Their demand for foreign currency nevertheless creates a pool of buyers that professional laundering networks can exploit. The broker matches the two sides. Cartel dollars collected in the United States are delivered to a buyer, deposited through a network of accounts or used to purchase goods. An equivalent amount of renminbi is then paid inside China through a separate domestic transaction. The cartel or its representative receives value in Mexico through pesos, commercial payments, goods, property or accounts controlled by front companies. The money does not need to travel from the United States to China and back through a conventional international transfer. Value moves, while the original currency often remains within the country where it was collected.This is the logic of the mirror transaction. It is fast, difficult to reconstruct and capable of serving two clients at once. The cartel disposes of incriminating cash. The Chinese customer acquires foreign spending power. The broker earns fees and may profit again through trade, exchange-rate spreads or the resale of goods.The laundering can then be layered through electronics, designer products, vehicles, property, casinos, restaurants, import-export companies, cashier’s cheques, peer-to-peer payments, shell businesses, stablecoins and other digital assets. Encrypted messaging allows couriers and brokers to verify cash pickups with serial numbers or photographs while revealing little about the wider network. Trade-based laundering is particularly effective because a legitimate shipment can disguise an illicit transfer of value through false invoices, overpricing, underpricing or transactions between related companies.Between 2020 and 2024, 137,153 suspicious activity reports covered approximately 312 billion dollars in activity potentially linked to Chinese money-laundering networks. That figure must not be mistaken for 312 billion dollars of proven cartel revenue. Suspicious activity reports may overlap, include attempted transfers and capture lawful as well as unlawful transactions. Even with that essential caveat, the scale shows how deeply these networks can touch banks, money-service businesses, property markets, retail commerce and digital payment systems.Recent cases expose the convergenceEvents during 2026 have made the structure increasingly visible. In May, two Chinese nationals were charged with participating in a transnational laundering organisation that allegedly served the Sinaloa Cartel and CJNG. The alleged methods included mirror transfers, foreign bank accounts, encrypted communications, serial-number verification and trade-based laundering across the United States, Mexico, Latin America and China. In another case announced in March, six Chinese nationals and two pharmaceutical companies were charged in conspiracies involving chemical agents used to manufacture or adulterate fentanyl. Three defendants were also accused of attempting to provide material support to a person they believed represented the Gulf Cartel. The allegations illustrated how chemical sales, payment processing and cartel logistics can merge within the same commercial relationship.In June, a Honduras-based Chinese national pleaded guilty to drug trafficking, laundering and providing support to CJNG. The network had coordinated the laundering of more than 22 million dollars in proceeds from cocaine and fentanyl sales and used cryptocurrency, trade-based methods and encrypted communications. It had also participated in moving more than 450 kilograms of cocaine. Each case has its own legal facts, and charges remain allegations until proven. Taken together, however, the cases reveal a mature service economy. Cartels are no longer merely buying chemicals from distant factories and hiring unrelated launderers afterwards. They can draw on overlapping networks that arrange procurement, transport, payment, currency conversion, concealment and reinvestment.That integration reduces costs and makes disruption harder. Arresting a cartel lieutenant may remove one customer, but it does not eliminate the broker. Seizing one chemical shipment may delay a laboratory, but it does not destroy the supplier network. Closing one account often causes the money to migrate to another bank, another trade corridor or another digital asset.Beijing’s responsibility is real, but it is not simpleThe evidence does not justify treating every China-linked actor as an agent of the Chinese state. It does, however, raise serious questions about enforcement, regulatory incentives and the degree of political priority assigned to the problem. China possesses one of the world’s largest chemical and pharmaceutical manufacturing sectors. Its scale is a legitimate economic strength, but it also creates an enormous monitoring challenge. Small producers, trading companies, online sellers and freight intermediaries can be difficult to supervise, especially when the products are dual-use chemicals rather than finished narcotics. Criminal vendors can change company names, websites, payment channels and export descriptions faster than traditional investigations can proceed.Beijing has taken meaningful steps. It placed fentanyl-related substances under broad control, has prosecuted selected offenders and has participated in limited joint operations. In May 2026, China added three more chemicals to its controlled precursor list for exports to the United States, Canada and Mexico, while warning businesses about eight additional substances that could be used to manufacture synthetic drugs. A joint Chinese and US investigation also led to five arrests and drug seizures. Those actions demonstrate that cooperation is possible. They also expose the central weakness of molecule-by-molecule regulation. Once one chemical is controlled, traffickers can turn to a pre-precursor, a substitute compound or a different synthesis route. Effective enforcement therefore requires regulation of chemical families, rigorous customer verification, scrutiny of suspicious export patterns and rapid exchange of intelligence with destination countries.China argues that the fentanyl crisis is fundamentally an American problem driven by domestic demand and that Washington uses the issue as a geopolitical weapon. The first part contains an important truth. Without a vast consumer market in the United States, there would be no comparable revenue stream for the cartels. Yet demand does not absolve suppliers, brokers or governments from acting against criminal diversion. The crisis is simultaneously American in consumption, Mexican in large-scale production and transnational in chemistry and finance.Mexico is the manufacturing hub and the battlefieldMexico is not a passive victim of a foreign scheme. Its cartels choose to buy the chemicals, operate the laboratories, corrupt officials, intimidate communities and smuggle the finished drugs. They have converted geographic proximity to the United States into a decisive commercial advantage and have used decades of experience in cocaine, heroin and methamphetamine trafficking to build a synthetic-drug industry of global reach.The Mexican government has intensified seizures, laboratory raids, border deployments and transfers of major cartel figures to US custody. These actions have disrupted individual organisations and demonstrated a greater willingness to confront high-value targets. Yet the underlying business model has proved highly adaptable. Leadership losses can trigger fragmentation, succession wars and temporary chaos without eliminating the market for drugs, laundering or protection. Ports remain a critical vulnerability. The volume of legitimate trade makes comprehensive inspection impossible, while corruption, intimidation and falsified documentation can help suspicious cargo pass through. Local police forces and prosecutors often face far greater resources and firepower on the criminal side. National institutions may conduct spectacular operations, but sustained control requires reliable customs systems, protected investigators, independent courts and a financial intelligence structure capable of following money through legitimate businesses.Mexico’s insistence on sovereignty is understandable, especially when US officials speak of unilateral action. But sovereignty cannot become a shield against verifiable evidence or a substitute for institutional reform. Equally, Washington cannot treat Mexico merely as a source of danger while ignoring the American market that generates the profit and the financial channels through which much of that profit circulates.Why the cartels are being savedChina-linked networks save Mexican cartels in three practical ways. First, they preserve production by supplying an evolving menu of chemicals and equipment when specific substances are banned. Secondly, they make laundering cheaper and safer by matching drug dollars with demand for foreign currency and goods among Chinese customers. Thirdly, they internationalise cartel finance, allowing proceeds to be converted into property, trade, digital assets and legitimate-looking business revenue across several jurisdictions.The word saving should not be confused with charity or ideology. These are commercial relationships. Chemical suppliers want sales. Money brokers want fees. Chinese clients want access to overseas currency. Mexican cartels want inputs and clean value. Each party can participate without understanding the entire structure, and that fragmentation protects the system from collapse. Yet the phrase can also mislead. China is not the sole cause of cartel power. Mexico’s corruption and impunity, US drug demand, weaknesses in global trade controls, gaps in financial supervision and the extraordinary profitability of synthetic narcotics all sustain the same market. Removing one Chinese supplier would not end it. Reducing the availability of China-linked chemicals and laundering services across the system would, however, make cartel operations slower, more expensive and more vulnerable.What could actually break the chainA serious strategy must target the network rather than its nationality. Chemical producers should be required to verify customers, end users and unusual shipping routes. Export controls should cover families of dangerous compounds and be updated rapidly as synthesis methods change. Online platforms should be compelled to remove sellers that advertise concealment or narcotics applications. Ports need risk-based screening built on trade data, beneficial ownership records and intelligence about brokers, not merely random container searches.Financial enforcement must look beyond large international transfers. The most revealing signals may be repeated cash deposits, unexplained purchases of electronics, rapid credit-card repayments, property acquired through third parties, companies trading far beyond their apparent capacity and stablecoin flows that do not fit a customer’s profile. Banks, payment companies, casinos, estate agents, customs services and digital-asset platforms need to see themselves as parts of the same defensive system. Targeted sanctions and prosecutions can isolate the brokers who connect otherwise separate criminal markets. They are likely to be more effective than broad tariffs, which punish legitimate trade and can be absorbed or circumvented without identifying a single illicit shipment. Mutual legal assistance between China, Mexico and the United States must become faster, more routine and less dependent on the wider political climate.Enforcement alone will not resolve the crisis. The United States must continue reducing overdose deaths through treatment, prevention, naloxone access and a credible strategy for lowering demand. Mexico must strengthen institutions that protect ports, courts and local government from criminal capture. China must police chemical exporters and underground banking with the same seriousness it applies to threats it regards as central to domestic stability.The deepest danger is the belief that the fentanyl economy is a straight line from a Chinese factory to a Mexican laboratory and then across the US border. It is a web of legal commerce, criminal brokerage, digital finance, corrupt facilitation and consumer demand. That is why it survives arrests, sanctions and record seizures. China is not single-handedly keeping Mexico’s cartels alive. But China-linked chemical and financial networks have become one of the principal systems that allow them to adapt, recover and expand. Breaking that relationship would not end organised crime. It would remove one of its most efficient engines.