Costco (NASDAQ:COST) has a fabulous reputation due to its low prices and famously well-treated workers.
In most cases, shopping at the warehouse chain will save you money as long as you plan accordingly. For example, the savings on meat and chicken can be tremendous as long as you're prepared to buy in large quantities and freeze what you won't use quickly. You can also save on a number other categories including razor blades, office supplies, and beverages if you're willing to buy in bulk and store them.
But just because the chain usually offers a good deal does not mean that it's always the best place to buy something. Costco carrying an item does not automatically mean it's a good deal. You should be wary of the items listed below, though that does not mean those products are a bad buy at the warehouse chain -- just that it's buyer beware since in many cases there are better deals to be had.
Shopping at Costco can be a bit of a sport. It can also be addictive, leading to poor buying choices that seem like a good idea but are not. Above all, when shopping at the warehouse club consider the plusses as well as the minuses of buying in bulk and be willing to comparison shop on big-ticket items.
Be wary of books and CDs
Costco often stocks a selection of discounted former best-sellers or other books and CDs, which can tempt buyers. The problem is that, in most cases, it's still cheaper to buy these books from Amazon (NASDAQ:AMZN) or other online retailers. In many cases, these books and CDs are titles that, though they might have been hits, were overproduced by the publisher. When that happens, copies show up on discount racks at bookstores and Amazon often blows out the titles at a very low cost to clear up warehouse space.
Diapers are a commodity
While Costco has good pricing on diapers, a number of retailers, including Target (NYSE:TGT) and Amazon, can be cheaper. In addition, both retailers (along with others) offer subscription services that lock in even lower prices while saving the purchaser the hassle of lugging around a giant package of bulk diapers.
Computers and other electronics
This is an area where Costco might have a well-priced item, but it also may come in higher than Target, Best Buy (NYSE:BBY), or even Amazon. In many cases, where to buy a computer or a television depends upon exactly what you want versus whatever deals each store has at a given moment. It's also a question of whether price alone is your deciding factor.
Amazon, for example, currently offers an off-brand 32-inch television from a third-party seller for $159.99, while Wal-Mart (NYSE:WMT) regularly stocks an off-brand model at just under that price. Costco's closest offering is a low-end model from a better-known brand for $184.99.
Factor in sales and deals and, in most cases, Costco won't be your cheapest option even if you're not willing to settle for a less brand. The same is generally true with computers and other electronics. It's worth looking at Costco, but your best price is probably going to come elsewhere.
Perishable goods in bulk
In most cases, when buying food items at Costco you're buying in bulk in order to get a good deal. When considering whether to purchase perishable items from the warehouse chain, you need to look at more than the per-serving price. It's also important to factor in expiration dates and usage.
For example, that giant jar of mayonnaise might seem like a great value, but if your rate of consumption will let half of it spoil then it becomes less of a deal (and it's probably a bad idea to increase consumption just to use it). In many cases, Costco's deals on perishables make sense if you have a big family or are throwing a party but less so if you don't.
This is another case where buying in bulk may not be for the best unless your usage rate actually makes it worth it. Laundry detergents actually lose their effectiveness over time, so that giant container that will last you two years is probably not a good deal.
"Laundry detergents don't expire, they break down, which can happen six months after opening and nine months to a year if left unopened," Huffington Post reported.
Daniel Kline has no position in any stocks mentioned. His father in law works for Costco. The Motley Fool recommends Amazon.com and Costco Wholesale. The Motley Fool owns shares of Amazon.com and Costco Wholesale. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.