Is Costco the next healthcare disrupter?

Jeffrey I. Cole founded the World Internet Project and directs the Center for the Digital Future at the USC Annenberg School. He is a coauthor of the book Disrupters at the Gate.

Costco, the Issaquah, Washington, warehouse giant, has announced that it is moving into healthcare, a product that is not neatly stacked in a warehouse aisle and will not fit in an oversized cart.

Picture a typical shopper’s reaction: “Costco is where I go when I need a few batteries or a can of peaches. I leave the store with a pallet filled with items I never thought I needed and struggle to fit into my oversized SUV. I love the experience, but why would I ever trust a warehouse store with my most important need: the health of my family and me?”

The answer is simple: Costco is a disrupter that is beloved and trusted.

Its reputation as a disrupter of retail and beyond is well earned. Just about everything in shopping in a large store has been transformed by the warehouse giant:

Costco perfected the membership model. More than 82 million households pay between $65 and $130 a year to enter a Costco warehouse. In the U.S. renewal rates sit at a remarkable 92.3%, a level matched only by Amazon Prime, which attracts most members through “no-cost” shipping.

Its pricing upends shopper behavior. Prices are so appealing that people buy things they did not plan on and in quantities far greater than they need.

It makes shopping fun. Beyond core everyday items, a rotating “treasure hunt” inventory of limited-run products strikes a chord with shoppers, and every location offers unique merchandise.

It sells what you would never expect in a warehouse: 2–3 carat diamond wedding rings (at over $10,000), Swiss watches (exceeding $20,000), and even caskets, along with expansions into travel, pharmacy, vision care and home remodeling.

Costco has built its reputation through........

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