Costco Wholesale

Case Study

With C2FO, Costco is changing the way it does business— improving vendor relationships and increasing investment returns along the way.

A household name and America’s most beloved membership warehouse club, Costco has been providing incredible value to its customers since 1983.

Dedicated to bringing its members the best possible prices on quality brand-name merchandise, Costco is the second largest retailer in the world after Walmart.

Its stores provide a wide selection of merchandise, plus the convenience of specialty departments and exclusive member services, all designed to make the shopping experience a pleasurable one.

“It’s not often that you have an opportunity to make a fundamental change in the way business is conducted. Our partnership with C2FO is a great example of what can be accomplished when thoughtful, ethical people are willing to challenge the status quo.”

Joseph E. Grachek III, VP Merchandise Accounting Controller

The Challenge

In 2011, Costco recognized a challenging working capital environment for business: its yields on investments were at all-time lows, and at the same time, vendors, especially SMBs, were facing a financial environment where existing funding options were expensive and hard to access.

To address this challenging environment for both Costco and its vendors, Joseph Grachek III, VP Merchandise Accounting Controller, began evaluating different dynamic discounting models.

“Costco wanted to introduce a solution to this problem that was a win-win-win for Costco, its suppliers, and ultimately Costco’s members.”

Costco’s requirements were strict: reduce administrative costs and generate a fair return on excess cash with a solution that would appeal to vendors and consistently meet their funding needs—all while using minimal internal resources.

The Solution

C2FO’s model was the only solution that allowed Costco to achieve its goals. Since its launch, the program has allowed Costco to improve vendor relationships, reduce cost and risk throughout its supply chain, and increase returns on short-term cash.

C2FO takes care of vendor onboarding, and the network effect of C2FO’s relationships with other large companies Costco’s vendors supply drives high adoption rates. It’s the win-win-win model Costco was looking for.

To date, the results have far exceeded expectations. Cumulative annual growth is over 180%. On average, Costco vendors using C2FO are receiving cash 22 days early, and Costco is earning a return 500 basis points higher than yields achieved by the Treasury team previously—with no incremental risk.

Financially strong vendors and growing returns and means Costco can keep providing members with great products at low prices.

Want to see more of the numbers behind Costco’s success with C2FO? Check out our extensive market analysis on Costco Wholesale.

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