Inside the Warehouse Wars Between Costco, Sam’s Club, and BJ’s

by Ahmed Ali

“Price is the symptom. Logistics is the cause.”

Warehouse clubs have turned low margins into a science. Their success depends not on marketing or store experience but on how efficiently they move bulk freight through concentrated supply chains. Costco, Sam’s Club, and BJ’s Wholesale are often grouped together, yet their logistics DNA could not be more different. Costco is built for simplicity and throughput, Sam’s Club for data precision and automation, and BJ’s for flexibility and regional responsiveness. The contrast between these models reveals how logistics, not price, defines competitive advantage in the club retail business.

SCALE AND ASSORTMENT

As of 2024, Costco operates 880 warehouses across 14 countries with revenue exceeding 248 billion dollars. Sam’s Club, owned by Walmart, runs 600 locations and generates 84 billion dollars, while BJ’s trails with 245 clubs and around 21 billion dollars. Despite similar customer experiences, Costco’s network moves roughly 2.5 times more volume per club than Sam’s and more than 3 times more than BJ’s.

That productivity begins with assortment. Costco carries about 3,700 active SKUs, Sam’s averages 6,000, and BJ’s nearly 7,500. Each Costco product sells in high velocity, enabling deeper supplier contracts and predictable replenishment cycles. Fewer SKUs also mean denser inventory turns. Costco averages 12.3 times per year, compared with 9.1 at Sam’s and 7.0 at BJ’s. This difference in turns frees up billions in working capital each quarter.

A typical Costco distribution center services 25 to 30 clubs and moves inventory with less than three days of safety stock, supported by replenishment trucks that run daily at full cube utilization. Sam’s relies on Walmart’s larger flow-through network, which introduces multi-category freight sharing but reduces control over timing and prioritization. BJ’s works through a hybrid model of company-owned regional distribution centers and outsourced carriers, which improves coverage but adds cost volatility and variable service levels.

FREIGHT AND DISTRIBUTION STRATEGY

Costco’s logistics advantage is built on freight control. During the 2021 to 2022 shipping crisis, when spot container rates spiked to 20,000 dollars per forty-foot equivalent, Costco chartered entire vessels from Asia to U.S. ports, reducing average lead time from 32 days to 24. This single move saved tens of millions in demurrage and kept shelves stocked while competitors battled congestion.

In 2024, Costco imported over 100,000 TEUs, equivalent to roughly 5 million cubic meters of goods, at an average landed cost of 13 cents per cubic foot. Sam’s Club, shipping through Walmart’s consolidated import lanes, averaged 17 cents per cubic foot, and BJ’s, which lacks consolidated ocean freight contracts, approached 21 cents. The freight gap of 30 to 40 percent per cubic foot directly impacts gross margin, especially in a model where product markup is often capped below 15 percent.

Domestically, Costco runs a lean hub-and-spoke system with 35 regional distribution centers serving the entire North American footprint. Each center dispatches trucks with 95 percent cube utilization, supported by cross-docking processes that keep dwell times below eight hours. Sam’s benefits from Walmart’s 9,000-truck private fleet and over 150 distribution centers, but its integration with general merchandise flows dilutes efficiency for high-volume club SKUs. BJ’s depends on regional 3PLs such as C&S Wholesale Grocers for dry goods and Americold for perishables, which provides flexibility but increases cost per case by an estimated 12 to 15 percent compared with self-managed networks.

PRIVATE LABEL AS A SUPPLY CHAIN STRATEGY

Private label strategy is where logistics and marketing converge. Costco’s Kirkland Signature now accounts for 28 percent of sales, or about 70 billion dollars annually, and is engineered for operational consistency. Each Kirkland item is built for bulk production, long runs, and standardized packaging dimensions that optimize pallet density and container fill. The company’s packaging teams work directly with suppliers to align carton sizes with Costco’s racking specifications, increasing freight efficiency by up to 8 percent per load.

Sam’s Club’s Member’s Mark brand contributes about 20 billion dollars in annual sales and leverages Walmart’s data platform, Luminate, to monitor SKU velocity and regional demand patterns. This digital integration enables adaptive order scheduling and AI-based forecasting, maintaining 95 percent in-stock rates across fast-moving categories. However, more frequent line updates and promotional rotation increase upstream complexity, forcing shorter production cycles and higher setup costs.

BJ’s private labels, Wellsley Farms and Berkley Jensen, make up around 20 percent of revenue and rely on third-party manufacturers. Their advantage lies in shorter regional distribution lanes, but their dispersed sourcing network leads to higher per-unit freight costs and longer lead times. By comparison, Costco’s long-term supplier contracts stabilize pricing and logistics planning, anchoring its ability to guarantee both volume and margin through commodity cycles.

TECHNOLOGY AND FORECASTING

Costco’s data advantage lies in its simplicity. With just 3,700 SKUs, its Relex Solutions forecasting system can focus on volume accuracy rather than variety. The company maintains forecast precision of 87 percent globally, allowing planners to reduce overstock by 15 percent year over year. Its low product churn further streamlines master data management, minimizing warehouse picking errors to below 0.2 percent.

Sam’s Club’s network runs on a more complex digital backbone. The Luminate AI platform integrates predictive analytics, IoT sensors, and real-time telemetry from stores. In 2024, Sam’s achieved 90 percent forecast accuracy in perishables and reduced out-of-stocks by 30 percent compared with pre-AI years. The company also uses computer vision in over 80 percent of clubs to automate shelf auditing and track case fill rates.

BJ’s modernization program began in 2023 with the rollout of Manhattan Associates WMS and Blue Yonder forecasting tools. Adoption remains uneven, but early pilots show a 6 percent reduction in backroom inventory and 8 percent improvement in replenishment timing. However, BJ’s dependence on multiple software systems and 3PL data feeds continues to limit end-to-end visibility compared with Costco’s tightly integrated ecosystem.

FINANCIAL PERFORMANCE THROUGH A LOGISTICS LENS

The logistics divergence among the three players is visible in their financial performance. Costco’s operating margin of 3.4 percent may look modest, but it consistently outperforms Sam’s 2.6 percent and BJ’s 2.2 percent. With over 248 billion dollars in revenue, that margin difference equates to nearly 2 billion dollars in additional operating income per year, driven largely by logistics efficiency.

Costco’s inventory turnover of 12.3 times compresses storage costs and frees up cash that would otherwise be tied in stock. Sam’s Club’s 9.1 times turnover reflects its more complex SKU mix, while BJ’s 7.0 times underscores the inefficiencies of smaller scale and outsourced freight. Freight cost per unit at Costco is 15 to 25 percent lower than peers, and its membership renewal rate of 92 percent outpaces Sam’s at 89 percent and BJ’s at 86 percent.

Costco’s capital productivity also compounds over time. The average Costco warehouse generates 285 million dollars in annual sales, compared with 140 million at Sam’s and 85 million at BJ’s. That density allows Costco to run on lower SG&A ratios and achieve a return on invested capital near 19 percent, well above the retail average of 11 percent.

SUPPLY CHAIN SUSTAINABILITY

Sustainability has become a logistics cost center as much as a branding exercise. Costco’s initiatives center on container efficiency and packaging redesign. By reducing packaging weight per unit by 15 percent since 2020, the company saved an estimated 90,000 metric tons of CO₂ annually and cut inbound shipping costs by over 30 million dollars.

Sam’s Club uses AI-based food waste tracking and has reduced perishables waste by 11 percent year over year. Walmart’s fleet electrification plan extends to Sam’s network, with over 1,500 zero-emission vehicles slated to operate by 2028. BJ’s has targeted shorter sourcing radii, lowering average lane length by 14 percent and CO₂ emissions per case by 6 percent annually.

For Costco, the logistics impact is quantifiable. Every 1 percent improvement in container utilization reduces emissions by 2 percent per shipped unit while improving cost efficiency simultaneously. This alignment of sustainability and economics further reinforces Costco’s logistics discipline as a business advantage, not a compliance exercise.

THE LOGISTICS MOAT

Costco’s moat rests on compression, reducing SKU count, supplier base, and freight distance into a predictable, repeatable system. Its small catalog reduces volatility and allows each product to move through the network at scale. Every link, from supplier to shelf, is standardized and measurable.

Sam’s Club’s moat is analytical depth. By integrating Walmart’s massive data and logistics infrastructure, Sam’s leverages machine learning and automation at a scale no other retailer can match. Yet its wider assortment introduces complexity that requires constant recalibration.

BJ’s advantage lies in agility. Its smaller footprint allows faster local pivots and regional sourcing flexibility. The tradeoff is cost. With less volume density, each shipment and supplier relationship bears a higher per-unit expense.

Costco wins by designing for subtraction, not addition. It eliminates variables and compounds savings through repetition. Sam’s competes by digitizing complexity, while BJ’s competes by reacting quickly to local shifts. In the end, the company that minimizes friction, not the one that collects the most data, earns the margin.

FINAL THOUGHTS

The warehouse club business may look simple from the floor, but the battle is won in freight lanes, supplier contracts, and replenishment cycles. Costco’s logistics model converts simplicity into scale, generating billions in savings through fewer SKUs, higher turns, and direct control of imports. Sam’s Club’s investment in predictive analytics has improved precision but cannot yet offset the structural complexity of a broader catalog. BJ’s remains a regional contender whose logistics flexibility comes at the expense of efficiency.

Efficiency is not about technology or assortment. It is about architecture. Costco’s architecture works because it removes friction at every stage of movement, from container to club shelf. Sam’s and BJ’s are formidable, but Costco’s rhythm, consistent, synchronized, and ruthlessly efficient, continues to set the standard for operational excellence in retail logistics.