Sam’s Club and Costco are popular choices for saving on everything from groceries to gasoline to eyeglasses. But which warehouse club should you join? Is one better than the other? How much does Sam’s Club membership cost? How about Costco’s? What about product prices and perks? To help us sort through the Costco vs. Sam’s debate, Bottom Line Personal spoke with Kevin Brasler, executive editor at the nonprofit consumer advocacy organization Consumers’ Checkbook.
How they work
Sam’s Cub and Costco both severely restrict their markups on merchandise and rely almost solely on membership fees to turn a profit. Offering the lowest possible prices helps them attract and keep members. They strike deals with suppliers, often selling surprisingly high-quality bulk goods under their private store labels.
That model is great for consumers…but only if they leverage it. It’s easy to be “store-struck” by the enormous vats of mayonnaise and sacks of trail mix—but will those items sit on your shelves and go bad before you ever use them? For that matter, is the store close enough to your home that you’ll shop there regularly? Will you actually take advantage of the fuel discount…or is the store not on your normal route, which would require you to make a special trip? Measure the membership fee against the actual, realistic savings you would expect to enjoy. Join only if the math works out in your favor.
Memberships
Sam’s Club has two membership levels—Club ($50 per year) and Plus membership ($110 per year). Sam’s Club members of either level can shop in the stores, purchase discounted gas, get free curbside pickup on some orders, and receive a second membership card for someone in their household. The main advantage to upgrading from Club to Plus is that Plus members earn 2% cash back on all purchases, with an annual cap of $500. Plus members also receive free shipping on some orders of $50 or more…free delivery on orders of $50 or more… extra savings on pharmacy, optical and tire and battery purchases…and free curbside pickup with no minimum order size.
Costco has three membership levels—the basic Gold Star membership tier ($65 per year)…Business, which is identical to Gold Star but offered to commercial customers and not individuals ($65 per year)…and Executive ($130 per year). Gold Star and Business members may shop in the store or online, receive two additional membership cards per household and may access automotive, pharmacy and optical services. Upgrading to the Executive level earns 2% cash back…but the annual cap is $1,250, making it a significantly better potential benefit than Sam’s. Costco’s Executive members also receive discounts on services provided by third parties, such as travel, insurance and home improvement.
Sam’s Club regularly offers steep discounts on the first year’s membership for new joiners. You usually can get in at the Club level for just $20 and the Plus level for $60. Costco sweetens its deal by offering gift cards worth $20 and $40.
Prices
Merchandise pricing is not a differentiator. Repeated surveys in multiple markets find the two warehouses are usually within 3% to 5% of each other in prices.
Quality
Costco wins in terms of quality of offerings. It gets especially strong reviews for its fresh meats, and shoppers frequently express loyalty toward its store brand Kirkland Signature, which has a reputation for high standards.
Consumers are less enthusiastic about Member’s Mark, the house brand at Sam’s Club, and its produce receives particularly low ratings in surveys.
Other differentiators
Scan-and-go
This service, in which shoppers can skip checkout lines by scanning items using their smartphones and the Sam’s Club app and then paying via phone, is provided at Sam’s Club but not at Costco. While it’s not usually a critical feature, some shoppers cherish its convenience.
Warranties
Costco gives extended warranties on purchases of most electronics and appliances. Sam’s Club only sells them as additional purchases.
Curbside pickup
Online shopping and curbside pickup is simpler at Sam’s Club than at Costco. The Costco experience is “powered by Instacart,” meaning that it leverages a third party that can make the customer journey more complex and costly.
Car pricing
Costco offers a service that arranges for haggle-free, at-or-below-MSRP pricing on most vehicle models Sam’s Club does not. While availability can be hit-and-miss, it’s a perk worth considering if you’re in the market for a new ride.
In-store dining
Both stores boast cafeterias offering hot dogs, pizza, pretzels and other items. But Costco consistently gets better reviews for quality of service and availability of items.
Location
Costco has about 200 more stores than Sam’s Club, which tends to operate in smaller population centers.
Is Sam’s Club worth it?
It is if there’s a Sam’s Club location convenient to you…if initial membership cost is important…if you’re okay with Walmart-level quality of goods…and if you’re a scan-and-go or online-and-curbside shopper. But for most consumers, Costco is the overall better choice.
