I ask specifically because while this is a very reasonable assumption (how could they sell them for so much less if not a lower quality product???) I know personally as someone who actually ran a consumer electronics company at one point in my career and sold into Costco as well as the other national retailers and dealers that the margin requirements of Costco were MUCH less (about 25%) of the cost to sell into national retailers. For instance selling to Best Buy and Fry's required 25-30% margin for the retailers to meet their requirements (remember I'm talking Margin and NOT markup here so the differences are even greater) vs Costco who could survive and profit in their model at 6-7% margin.....this of course was a big problem for our "Traditional" channels that were developed and matured during the 70's, 80's, 90's and into the new century while at the same time Costco was redefining the supply chain to the customer and how to deliver a higher quality at a lower cost (read value).
So......with this and again not trying to pick a fight, I would ask if there is anything but the fact that they sell their batteries for less than the traditional channel, when the definitive comment is made that the Interstate batteries sold through Costco are specifically built to a lower standard???? Basic logic and reason without specific experience of the companies business model would lead one to believe this as it would seem to be very logical on the surface.......my real world experience however would lead me to believe that Costco is able to sell batteries at a much lower cost due to their superior volume through significantly fewer outlets with much lower profit margin requirements to meet shareholder expectations.
BTW.....we also created a "Private" label set of part numbers and even designed an alternate set of features and benefits (eventually) not because we needed to deliver products to Costco at a lower cost as we really didn't need to do that with their lower margin requirements but as a measure to protect our other channels that required much higher margins to support their respective business models........Food for thought

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