UPDATE: Costco is making urgent moves to tighten its membership policies, just announced on December 12, 2025, as the wholesale giant sees a surge in profits fueled by its membership fees. The company, which raked in over $5.3 billion from 68.3 million households and 12.7 million businesses last year, is now implementing stricter ID checks at entrances and self-checkouts to combat unauthorized card sharing.
This crackdown comes as Costco’s average merchandise markup remains low at just 11%, significantly below the 25% to 50% margins typical of similar retailers. Despite net sales approaching $270 billion last fiscal year, Costco’s profitability from product sales is not as robust as competitors like Walmart or Target, which is why the company is now focusing intently on its membership revenue.
In a move reminiscent of Netflix’s recent policy changes, Costco aims to boost its profits by converting non-paying consumers into paying members. Analysts are calling this Costco’s “Netflix moment,” highlighting the urgency of the situation. The company is responding to rising costs by not only enforcing membership policies but also introducing new perks, like early shopping hours for executive members, to enhance the value of membership.
With renewal rates soaring at 92.2% in the U.S. and 89.7% globally, Costco is in a strong financial position but recognizes the need to adapt to increasing operational expenses. As the membership fees comprise over half of Costco’s total profits, the company’s new measures could significantly impact its bottom line.
Consumers are encouraged to ensure their memberships are up to date, as Costco reinforces its policies to ensure that all members are legitimate. The latest developments signal a critical shift in how Costco operates, aligning its business model more closely with subscription services like Netflix, focusing on access over merchandise sales.
Going forward, Costco plans to continue enhancing member benefits, ensuring customers feel they are getting the most value from their memberships. With these changes, the company is poised for a strong financial future, directly impacting millions of customers who rely on the wholesale giant for their shopping needs.
This urgent update underscores the importance of membership in Costco’s financial ecosystem. As the retail landscape evolves, Costco’s strategic decisions could redefine how wholesale clubs operate in the future.