Would the American company called Costco be successful in thailand?

[watcharacters]

It has a customer friendly model and certainly thrives in the countries where it's located.

What do you think?

http://www.cnbc.com/id/47175492

[kevvy]

They have everything under the sun, and the prices are great. Yes you do need to pay for a membership even to enter the store, but it's not expensive, and after a couple of visits it ends up paying for itself. The staff are friendly, the products especially the fresh foodstuffs are high quality, and the range is fantastic. They will change the way people shop if it is like their stores in America and Australia.

[NeverSure]

I don't think so. I think the import duties would kill them. Their business model is to buy in huge volume, have a lot of their products branded under their store name (Kirkland) and sell larger packages of brand name items. I don't see them adapting to Thai products in lower volume.

They will also dump a supplier who doesn't suit them. You can get used to buying a product there over a long period of time, and then it just disappears never to return. In Thailand, many markets are controlled. Costco doesn't play that game.

In short, Costco is so big that it makes all the rules with suppliers. I don't see that happening in Thailand.

[Thai at Heart]

I don't think so. I think the import duties would kill them. Their business model is to buy in huge volume, have a lot of their products branded under their store name (Kirkland) and sell larger packages of brand name items. I don't see them adapting to Thai products in lower volume.

They will also dump a supplier who doesn't suit them. You can get used to buying a product there over a long period of time, and then it just disappears never to return. In Thailand, many markets are controlled. Costco doesn't play that game.

In short, Costco is so big that it makes all the rules with suppliers. I don't see that happening in Thailand.

First of all they would have to give away 51% of the company since retailing is a protected industry because Thais apparently aren't ready to compete. Which translates into, Thais would like to gouge the market and not have any real competition.

[isawasnake]

Nothing will work here. It would be like Cosco at Organic Grocery store prices.

[isawasnake]

I don't think so. I think the import duties would kill them. Their business model is to buy in huge volume, have a lot of their products branded under their store name (Kirkland) and sell larger packages of brand name items. I don't see them adapting to Thai products in lower volume.

They will also dump a supplier who doesn't suit them. You can get used to buying a product there over a long period of time, and then it just disappears never to return. In Thailand, many markets are controlled. Costco doesn't play that game.

In short, Costco is so big that it makes all the rules with suppliers. I don't see that happening in Thailand.

First of all they would have to give away 51% of the company since retailing is a protected industry because Thais apparently aren't ready to compete. Which translates into, Thais would like to gouge the market and not have any real competition.

Like going to the olympics and being the only country to show up. Sometimes I feel like the elephant in the room is how scared the Thais are of finding out how competitive they really are in an international market.

[klubex99]

I don't think so. I think the import duties would kill them. Their business model is to buy in huge volume, have a lot of their products branded under their store name (Kirkland) and sell larger packages of brand name items. I don't see them adapting to Thai products in lower volume.

They will also dump a supplier who doesn't suit them. You can get used to buying a product there over a long period of time, and then it just disappears never to return. In Thailand, many markets are controlled. Costco doesn't play that game.

In short, Costco is so big that it makes all the rules with suppliers. I don't see that happening in Thailand.

Don't mean to be obtuse or anything, but your statement doesn't make any sense at all.

You say that many markets in Thailand are controlled, and Costco does not play that game, but you also say that Costco attempts to control suppliers. So really you just undermined one statement with another.

Anyway, Costco will source from countries where there is either zero duty or very little. New Zealand come to mind straight away.

As for not being able to control the suppliers in Thailand, CP has been doing it for years and has an almost monopoly on controlling the farmgate price. But with their recent acquisition of Makro, they want to watch their backs, because if Cosco put a wholesaler in every town that Makro are in, then it is going to prove to be a complete waste of money and they paid well over the odds for it in the first place.

I am thrilled to see Costco coming, and they will change the way CP have been abusing their suppliers if there is now a new kid on the block who will create some healthy alternative for the farmers to supply.

[klubex99]

I don't think so. I think the import duties would kill them. Their business model is to buy in huge volume, have a lot of their products branded under their store name (Kirkland) and sell larger packages of brand name items. I don't see them adapting to Thai products in lower volume.

They will also dump a supplier who doesn't suit them. You can get used to buying a product there over a long period of time, and then it just disappears never to return. In Thailand, many markets are controlled. Costco doesn't play that game.

In short, Costco is so big that it makes all the rules with suppliers. I don't see that happening in Thailand.

First of all they would have to give away 51% of the company since retailing is a protected industry because Thais apparently aren't ready to compete. Which translates into, Thais would like to gouge the market and not have any real competition.

Nope.

Are Mc Donalds, Dunkin Donuts, and many many other western companys here 51% owned by Thais? Makro wasn't either.... Ever heard of the franchise route?

[manarak]

I don't think so. I think the import duties would kill them. Their business model is to buy in huge volume, have a lot of their products branded under their store name (Kirkland) and sell larger packages of brand name items. I don't see them adapting to Thai products in lower volume.

They will also dump a supplier who doesn't suit them. You can get used to buying a product there over a long period of time, and then it just disappears never to return. In Thailand, many markets are controlled. Costco doesn't play that game.

In short, Costco is so big that it makes all the rules with suppliers. I don't see that happening in Thailand.

First of all they would have to give away 51% of the company since retailing is a protected industry because Thais apparently aren't ready to compete. Which translates into, Thais would like to gouge the market and not have any real competition.

Like going to the olympics and being the only country to show up. Sometimes I feel like the elephant in the room is how scared the Thais are of finding out how competitive they really are in an international market.

It's not that simple. Thai manufacturers are very competitive in some areas, but due to international trade agreements, they aren't allowed to sell their products everywhere unhindered.

[klubex99]

I notice that Costco's share price is up 0.5% and CP price is down 1.5%

Says it all really

[maccaroni man]

Yes much better customer service than macro

[farang000999]

Of course. But the question is if it would be worth it for them to do so. I would say probably not. I don't think Thais have enough income for it or desire to spend it on the type of stuff they sell and there is not that much money in fish sauce with all the competition.

[Thai at Heart]

I don't think so. I think the import duties would kill them. Their business model is to buy in huge volume, have a lot of their products branded under their store name (Kirkland) and sell larger packages of brand name items. I don't see them adapting to Thai products in lower volume.

They will also dump a supplier who doesn't suit them. You can get used to buying a product there over a long period of time, and then it just disappears never to return. In Thailand, many markets are controlled. Costco doesn't play that game.

In short, Costco is so big that it makes all the rules with suppliers. I don't see that happening in Thailand.

First of all they would have to give away 51% of the company since retailing is a protected industry because Thais apparently aren't ready to compete. Which translates into, Thais would like to gouge the market and not have any real competition.

Like going to the olympics and being the only country to show up. Sometimes I feel like the elephant in the room is how scared the Thais are of finding out how competitive they really are in an international market.

Bear in mind that virtually all of these protected industries are dominated by Thai Chinese business owners. They have put successive Thai governments so far in their pockets, that changing anything is virtually impossible

[farang000999]

I just think most Thais spend their money as follows:

food (basic generic items like soy sauce, fish sauce, meat, eggs, veggie, pepsi)

car - very important for FACE value no matter how much debt you go into

cell phone - item you use most often and can use on the BTS and anywhere you go (STARBUCKS) to let everyone know that you are rich

gold - it is like wearing money around your neck.

then for discretionary spending:

clothes and shoes for women

whiskey and whores for men

I don't see a whole lot of market for Costco, sadly.

[Thai at Heart]

I don't think so. I think the import duties would kill them. Their business model is to buy in huge volume, have a lot of their products branded under their store name (Kirkland) and sell larger packages of brand name items. I don't see them adapting to Thai products in lower volume.

They will also dump a supplier who doesn't suit them. You can get used to buying a product there over a long period of time, and then it just disappears never to return. In Thailand, many markets are controlled. Costco doesn't play that game.

In short, Costco is so big that it makes all the rules with suppliers. I don't see that happening in Thailand.

First of all they would have to give away 51% of the company since retailing is a protected industry because Thais apparently aren't ready to compete. Which translates into, Thais would like to gouge the market and not have any real competition.

Nope.

Are Mc Donalds, Dunkin Donuts, and many many other western companys here 51% owned by Thais? Makro wasn't either.... Ever heard of the franchise route?

Um. Yes they are. Dunkin donuts franchise is owned by minor corp which is a Thai company owned by an american who became Thai. McDonalds Thailand is either a joint venture or a franchise. Makro was a nominee company. Tesco is a nominee company. Just ask Pepsi or carlsberg how well joint ventures can go.

Restaurants are not retailers by the way.

[impulse]

Interesting tidbit that makes me respect Costco...

http://money.cnn.com/2013/08/06/news/economy/costco-fast-food-strikes/index.html?iid=obnetwork

[Tmymaimee]

Considering that the majority of Thais live in shoebox size apartments, don't own cars and live cheque to cheque, Costco wouldn't succeed. Costco depends on customers owing large freezers, arriving by car because of the big loads not fitting on public transit and a house with sufficient storage for your 10 lbs of salad dressing a 5 loaves of bread. Not to mention I would think that the average income of a Costo customer would be $60K + USD per year, far beyond the 15,000 baht average Thai salary.

There's no problem with the 51% Thai ownership as many Thai corporations would love to partner with an American company such as Costco. Just look at all the successful joint ventures already in place that do well (7-11, Hilton, Marriott, Heineken, etc.) Its hard for a Thai company to rip off an American corporation when you have quality lawyers drafting partnerships.

[Soutpeel]

Considering that the majority of Thais live in shoebox size apartments, don't own cars and live cheque to cheque, Costco wouldn't succeed. Costco depends on customers owing large freezers, arriving by car because of the big loads not fitting on public transit and a house with sufficient storage for your 10 lbs of salad dressing a 5 loaves of bread. Not to mention I would think that the average income of a Costo customer would be $60K + USD per year, far beyond the 15,000 baht average Thai salary.

There's no problem with the 51% Thai ownership as many Thai corporations would love to partner with an American company such as Costco. Just look at all the successful joint ventures already in place that do well (7-11, Hilton, Marriott, Heineken, etc.) Its hard for a Thai company to rip off an American corporation when you have quality lawyers drafting partnerships.

Heineken is an American company..?.... .....you had better tell them this in Amsterdam...which in not in New York BTW

As regards the $60k/yr you talk about, the vast majority of farangs living Thailand dont make this either, also live shoebox sized apartments and dont have a car either...

and in fact the median salary in the US is $42k/yr....therefore the average person in the US cant shop there either according to your numbers..

further why would an American company even worry about 51% ownership...there is something called an Amity agreement, but in fact once a corperation is registered in Thailand, even the case of a partnership it falls under Thai law not under US law..

[pancakeman]

Considering that the majority of Thais live in shoebox size apartments, don't own cars and live cheque to cheque, Costco wouldn't succeed. Costco depends on customers owing large freezers, arriving by car because of the big loads not fitting on public transit and a house with sufficient storage for your 10 lbs of salad dressing a 5 loaves of bread. Not to mention I would think that the average income of a Costo customer would be $60K + USD per year, far beyond the 15,000 baht average Thai salary.

There's no problem with the 51% Thai ownership as many Thai corporations would love to partner with an American company such as Costco. Just look at all the successful joint ventures already in place that do well (7-11, Hilton, Marriott, Heineken, etc.) Its hard for a Thai company to rip off an American corporation when you have quality lawyers drafting partnerships.

I guess you've never met people like my MIL; she goes shopping and comes home with packages of 25 Brilo pads, or 50 airline size toothpastes...because it was a "good deal". Her room is packed with jumbo size packages of all kinds of items.

[Nana Cowboy]

forget it. if it was so great they'd be here already. ever been into a Big C or tesco? LOL. they have aisles of wasted space of OIL, Rice and EGGS. its a joke. costco wouldnt be caught dead here nor walmart or all the great American retailers. there's a reason none of them are here already. just block it out of your mind and you'll be fine. go enjoy warehouse stores of cooking oil. LOL

[Suradit69]

I just think most Thais spend their money as follows:

food (basic generic items like soy sauce, fish sauce, meat, eggs, veggie, pepsi)

car - very important for FACE value no matter how much debt you go into

cell phone - item you use most often and can use on the BTS and anywhere you go (STARBUCKS) to let everyone know that you are rich

gold - it is like wearing money around your neck.

then for discretionary spending:

clothes and shoes for women

whiskey and whores for men

I don't see a whole lot of market for Costco, sadly.

"I just think most Thais spend their money as follows"

It must be fun nurturing your prejudices and watching them grow up to be full blown imaginary ego boosters that support you in your dotage.

"whiskey and whores for men"

Wow, talk about the pot calling the kettle a sex tourist.

[stoli]

Makro is already the Costco of Thailand, and they would be a formidable competitor for Costco to overcome. I would love to see the "Dollar Store" concept come to Thailand. Goodness knows that all of their product comes from this part of the world. I am tired of the extremely high prices here for simple kitchen gadgets. The Dollar Store would rock. I would love to see a Walmart, but they have their hands full right now in the states. Walmart would love the minimum wage scale here.

[paulchiangmai]

They have everything under the sun, and the prices are great. Yes you do need to pay for a membership even to enter the store, but it's not expensive, and after a couple of visits it ends up paying for itself. The staff are friendly, the products especially the fresh foodstuffs are high quality, and the range is fantastic. They will change the way people shop if it is like their stores in America and Australia.

When the first Cosco store opened in Melbourne not too long ago I thought I would go along to the opening day and see how it compared to an American Cosco store, they wouldn't let me in just to look unless I signed up at a cost of $50. I didn't need to look that bad and left.

[NeverSure]

Makro is already the Costco of Thailand, and they would be a formidable competitor for Costco to overcome. I would love to see the "Dollar Store" concept come to Thailand. Goodness knows that all of their product comes from this part of the world. I am tired of the extremely high prices here for simple kitchen gadgets. The Dollar Store would rock. I would love to see a Walmart, but they have their hands full right now in the states. Walmart would love the minimum wage scale here.

The reason the Dollar Store can work is that the US doesn't charge import duties. Tack on Thailand's import duties and it's business rules and you'd be right back up to high prices.

BTW about 1/2 of all Walmart stores are outside the US now. If you put one in Thailand, it would sure have to look different for merchandise and prices.

Look at all of the problems just Pepsi has had dealing with Thai rules and Thai people. If it's that hard to sell soft drinks...

Now the fast food franchises can make it because even in the US they are individually owned for the most part, and you can get your supplies mostly in country - at least the expensive parts. Land and buildings are cheaper in Thailand as is labor, but you still pay about the same price for the same menu item as you do in the US.

Thailand is protectionist to the max.

[smccolley]

I don't think so. I think the import duties would kill them. Their business model is to buy in huge volume, have a lot of their products branded under their store name (Kirkland) and sell larger packages of brand name items. I don't see them adapting to Thai products in lower volume.

They will also dump a supplier who doesn't suit them. You can get used to buying a product there over a long period of time, and then it just disappears never to return. In Thailand, many markets are controlled. Costco doesn't play that game.

In short, Costco is so big that it makes all the rules with suppliers. I don't see that happening in Thailand.

I believe the real issue is the volume purchasing. It seems that Thais in general do not buy in volume for their households in general. My wife must go to the store 3 times a day for food, and when I buy canned veges she looks at me in shock.

Since everything is available in a JIT (Just In Time) methodology here I don't believe Thais would as readily take to stockpiling goods as they do in North America.

Am I wrong?

[Soutpeel]

It seems that Thais in general do not buy in volume for their households in general. My wife must go to the store 3 times a day for food, and when I buy canned veges she looks at me in shock.

I wish someone should tell my Mrs this.. ..We have enough f*kcing toilets rolls, ear buds, floor cleaner, tooth paste, deodrant...etc to open a shop of our own in my place, one of these days I am going to burn her Makro card...

[isawasnake]

I have not been to macro yet, but from what I have seen the Thai products are not priced according to the obviously logical tenets of buy more pay less. In fact, when you do the math many times the higher volume product costs more (god help us who live here and abide by logic). It is a pricing scheme made by people who know the shoppers are not doing the math; and it is a total nightmare.

In short, sadly, I think a Thai shopper would walk into Cosco and say "why in the world would I want an 80 oz box of cheezits", which may be a good point, ha. But, the fact remains, Thais just think that buying a lot simply means that they are, well..... buying a lot. The price reduction aspect of the equation does not seem to infiltrate the national ethos.

Edited September 6, 2013 by isawasnake

[xxoahu22]

he did not say Heineken was American

he did not say the average American was the target market for Costco

and the final mash-up of words was unintelligible.

you comment was useless but the use of cute emoticons is useful for figuring out the level of thoughtfulness that went into your reply.

trolls rule this comment board. so disappointing.

Considering that the majority of Thais live in shoebox size apartments, don't own cars and live cheque to cheque, Costco wouldn't succeed. Costco depends on customers owing large freezers, arriving by car because of the big loads not fitting on public transit and a house with sufficient storage for your 10 lbs of salad dressing a 5 loaves of bread. Not to mention I would think that the average income of a Costo customer would be $60K + USD per year, far beyond the 15,000 baht average Thai salary.

There's no problem with the 51% Thai ownership as many Thai corporations would love to partner with an American company such as Costco. Just look at all the successful joint ventures already in place that do well (7-11, Hilton, Marriott, Heineken, etc.) Its hard for a Thai company to rip off an American corporation when you have quality lawyers drafting partnerships.

Heineken is an American company..?.... .....you had better tell them this in Amsterdam...which in not in New York BTW

As regards the $60k/yr you talk about, the vast majority of farangs living Thailand dont make this either, also live shoebox sized apartments and dont have a car either...

and in fact the median salary in the US is $42k/yr....therefore the average person in the US cant shop there either according to your numbers..

further why would an American company even worry about 51% ownership...there is something called an Amity agreement, but in fact once a corperation is registered in Thailand, even the case of a partnership it falls under Thai law not under US law..

[Soutpeel]

he did not say Heineken was American

he did not say the average American was the target market for Costco

and the final mash-up of words was unintelligible.

you comment was useless but the use of cute emoticons is useful for figuring out the level of thoughtfulness that went into your reply.

trolls rule this comment board. so disappointing.

Considering that the majority of Thais live in shoebox size apartments, don't own cars and live cheque to cheque, Costco wouldn't succeed. Costco depends on customers owing large freezers, arriving by car because of the big loads not fitting on public transit and a house with sufficient storage for your 10 lbs of salad dressing a 5 loaves of bread. Not to mention I would think that the average income of a Costo customer would be $60K + USD per year, far beyond the 15,000 baht average Thai salary.

There's no problem with the 51% Thai ownership as many Thai corporations would love to partner with an American company such as Costco. Just look at all the successful joint ventures already in place that do well (7-11, Hilton, Marriott, Heineken, etc.) Its hard for a Thai company to rip off an American corporation when you have quality lawyers drafting partnerships.

Heineken is an American company..?.... .....you had better tell them this in Amsterdam...which in not in New York BTW

As regards the $60k/yr you talk about, the vast majority of farangs living Thailand dont make this either, also live shoebox sized apartments and dont have a car either...

and in fact the median salary in the US is $42k/yr....therefore the average person in the US cant shop there either according to your numbers..

further why would an American company even worry about 51% ownership...there is something called an Amity agreement, but in fact once a corperation is registered in Thailand, even the case of a partnership it falls under Thai law not under US law..

You do know posting under multiple user names is not allowed don't you ?

[hhgz]

"Since everything is available in a JIT (Just In Time) methodology here I don't believe Thais would as readily take to stockpiling goods as they do in North America. Am I wrong?"

Yes, you are. Evidently you've never visited a Makro.