Sorry I don't get the point. Costco's competitors selling Costo's cheaper product would still harm costco ?
Does costco get some extra benefit if the consumer buys Kirkland from costco ?
Does costco get some extra benefit if the consumer buys Kirkland from costco ?
Yes. Costco positions their store brand as a major part of their appeal. This attracts more consumers to their stores, which
A. Increases membership, for which there's an annual fee, and
B. Increases traffic, increasing sales of high margin items as well as the low margin store brand.
If they were to give away their reputation to other sellers by letting them sell their QC'd products, they would be lowering the value of their memberships.