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Cramer Says Costco's Business Model Works 'Perfectly' In US, Even Better In China

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Cramer Says Costco's Business Model Works 'Perfectly' In US, Even Better In China

Costco Wholesale Corporation's (NASDAQ: COST) business model of offering consumers compelling products at attractive prices works "perfectly in a trade war," but a new store in China is working even better, according to CNBC's Jim Cramer.

Cramer Says Costco Will 'Figure Out' E-Commerce 

Costco's business model allows it to easily navigate the trade war to the point where it can nearly eliminate any tariffs from China, Cramer said on Friday's "Mad Money."

Costco has proven it can keep offering low prices and support margins, an accomplishment that "isn't supposed to happen" during a trade war, the CNBC host said. 

The secret to Costco's success is its ability to replace a Chinese imported product with an alternative product from somewhere else in the world, Cramer said.

Few companies can operate with a perfect track record, and Costco is no different. The company had a brief glitch on its website that resulted in lost sales, Cramer said. 

This comes at a time when the company's e-commerce business pales in comparison to some peers, but Cramer said "ultimately, they're going to figure it out."

Costco's Shanghai Store 

Costco opened its first physical retail store in Shanghai in late August, and it has already attracted more than 200,000 members, Cramer said.

This figure is roughly double the membership base of a typical store in Asia, he said. 

This creates a problem for Costco, as it has one store in Shanghai and a total market opportunity of 25 million people, the CNBC host said. 

Costco shares were trading 0.64% higher at $293.75 at the time of publication Monday. 

Related Links:

Costco Higher Following China Store Opening

Bernstein: Costco Overvalued By 'Pretty Much Every Measure'

Posted-In: China CNBC Costco China e-commerce Jim CramerNews Global Media Best of Benzinga

 

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