Retailers usually fight for every transaction. Membership businesses change the equation by getting customers to pay for access before they buy anything at all. Costco reports Thursday after the close, giving you a fresh test of whether loyalty itself can be one of the most valuable products in retail.
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Theme: Membership Retail, Recurring Fees, Loyalty, E-Commerce, Convenience, and Customer Lifetime Value
The Fee Changes the Economics
Most retailers make money when a customer buys something. Costco makes money before the shopping trip even begins.
At the end of fiscal Q3, Costco had 82.9 million paid memberships and 148.5 million cardholders. Its U.S. and Canada renewal rate remained 92.2%, while membership fee revenue increased 11% to $1.37 billion.
That recurring revenue lets Costco focus aggressively on merchandise value because part of the profit model sits outside the shopping basket. Members pay a fee, Costco gives them a reason to keep shopping, and higher engagement makes the membership increasingly valuable.
The model now extends far beyond warehouse clubs. Walmart is building Walmart+, Amazon uses Prime to connect shopping with delivery and entertainment, while DoorDash uses DashPass to reduce ordering friction and increase frequency.
What’s Driving It
Costco Is Thursday’s Main Catalyst
Costco reports fiscal Q4 results Thursday after the close. We already know fourth-quarter net sales increased 11.3% to $93.9 billion, while comparable sales rose 9.4% and digitally enabled comparable sales jumped 19.5%.
The more important numbers Thursday will be membership fee income, paid membership growth, Executive penetration, renewal rates, margins, traffic, and international expansion.
Executive members deserve particular attention. Costco had 41.2 million Executive memberships at the end of Q3, and those members generated roughly 75% of worldwide sales. Costco gets a higher annual fee, while the rewards structure encourages its most valuable customers to spend even more.
Membership Can Change Customer Behavior
The real value of membership goes beyond collecting a fee.
Walmart’s latest quarter showed Walmart+ fee revenue growing at a double-digit rate with record Q2 net additions, while Walmart U.S. e-commerce sales increased 24%.
DoorDash makes the connection even clearer. It says DashPass members generally order more frequently and remain customers longer. In the 12 months through Q2, DoorDash added more U.S. paid DashPass members than during the previous two years combined.
That is the bigger opportunity: membership can turn an occasional customer into a habitual one.
The Chain Reaction
Customer pays a membership fee → company provides better value and convenience → customer spends more often → engagement deepens → membership becomes harder to cancel → renewal stays high → recurring fees and higher spending reinforce the model
What to Watch
For Costco, watch paid memberships, renewal rates, Executive growth, membership fee income, traffic, digital sales, and gross margin.
The best result shows that Costco’s already strong sales growth continues to bring more customers deeper into the membership ecosystem. Also watch renewal carefully. Costco has noted that memberships acquired online tend to renew at slightly lower rates, making long-term engagement more important than simply adding names.
Costco Wholesale (COST)
What it does:
Costco operates 939 membership warehouses worldwide, selling groceries, household goods, electronics, apparel, fuel, and other merchandise through a limited-assortment, high-volume model.
Why it fits:
Costco is the purest version of the membership-retail thesis. The fee is not an add-on. It is central to how Costco can keep merchandise margins low while still producing attractive economics.
That makes the relationship different from a normal retailer. Costco wants customers to feel that the annual fee is easily recovered through savings, which gives management a strong incentive to protect pricing and value.
What stands out:
Q3 membership fee revenue increased 11%, paid memberships grew 4.1% to 82.9 million, and U.S. and Canada renewal remained at 92.2%. Executive members generate roughly three-quarters of sales, showing how Costco’s most committed customers also drive the majority of spending.
Fourth-quarter net sales then increased 11.3%, while digitally enabled comparable sales rose nearly 20%.
What to watch:
Renewal rates, Executive upgrades, membership fee income, traffic, international expansion, and margins.
The Takeaway: Buy this if you want the strongest pure-play on turning retail loyalty into recurring revenue. Costco can give up some merchandise margin because the membership itself carries enormous economic value.
The risk is valuation. Consistent excellence leaves little room for disappointment.
BJ’s Wholesale Club (BJ)
What it does:
BJ’s operates membership warehouse clubs concentrated in the eastern United States, selling groceries, general merchandise, fuel, and private-label products.
Why it fits:
BJ’s uses essentially the same membership logic as Costco but from a much smaller base. That creates more room to grow the club network, add members, and deepen each relationship.
Its opportunity is not to become Costco overnight. BJ’s can work simply by expanding into new markets while improving the economics of existing stores.
What stands out:
Fiscal Q2 membership fee income increased 9.9% to $135.6 million, while the member base reached a record 8.5 million. Digitally enabled comparable sales jumped 30%, and BJ’s has maintained roughly 90% renewal among tenured members.
Management is also opening new clubs, giving it a straightforward physical growth runway that Costco no longer has to the same extent in the U.S.
What to watch:
Member growth, higher-tier penetration, renewal, new-club performance, digital adoption, private label, and margins.
The Takeaway: Buy this if you want the smaller warehouse-club growth story. BJ’s can compound through new locations, membership growth, and deeper customer engagement.
The risk is that aggressive expansion raises costs before new clubs reach mature profitability.
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Walmart (WMT)
What it does:
Walmart combines stores, grocery, e-commerce, delivery, advertising, marketplace services, Walmart+, and Sam’s Club into one enormous retail ecosystem.
Why it fits:
Walmart shows how membership can strengthen a retailer that does not require one. Walmart+ gives regular shoppers incentives to use delivery and digital services more often, while Sam’s Club provides a traditional warehouse-membership model.
The real advantage is Walmart’s store network. Those stores can also function as local fulfillment hubs, making membership benefits such as fast delivery more valuable.
What stands out:
Walmart U.S. e-commerce sales increased 24% last quarter, Walmart+ fee revenue grew at a double-digit rate, and management reported record Q2 membership net additions. Sam’s Club e-commerce rose 26%, while member counts and higher-tier Plus penetration also increased.
What to watch:
Walmart+ growth, delivery economics, Sam’s Club membership, advertising, marketplace growth, and e-commerce profitability.
The Takeaway: Buy this if you want membership embedded inside a much larger retail ecosystem. Walmart can use subscriptions to increase shopping frequency while also strengthening higher-margin businesses such as advertising and marketplace services.
The risk is that delivery investments and aggressive pricing absorb too much of the incremental profit.
Amazon (AMZN)
What it does:
Amazon combines e-commerce, Prime, advertising, AWS, streaming, grocery, and logistics inside one enormous consumer and enterprise ecosystem.
Why it fits:
Prime may be the best example of a membership becoming more valuable than any single benefit. Customers may join for shipping, then stay for entertainment, grocery, deals, convenience, or simply because Amazon becomes part of their routine.
That gives Amazon opportunities beyond the membership fee. More frequent visits create more purchases, more marketplace activity, and more advertising inventory.
What stands out:
Amazon said it achieved record Prime delivery speeds during the first half of 2026, with more than 40% more items delivered same-day or overnight. Faster delivery helps shift Amazon from occasional e-commerce toward everyday purchasing.
Advertising revenue also increased 26% in Q2, showing how deeper consumer engagement can support other high-margin businesses.
What to watch:
Prime engagement, delivery speed, everyday-essential growth, advertising, international retail profitability, and fulfillment costs.
The Takeaway: Buy this if you want the broadest membership ecosystem in the basket. Prime pulls customers deeper into shopping, entertainment, advertising, and Amazon’s logistics network.
The risk is that Amazon must keep investing heavily to make the ecosystem feel indispensable.
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DoorDash (DASH)
What it does:
DoorDash operates delivery marketplaces across restaurants, grocery, convenience, retail, and other local-commerce categories, with DashPass as its primary membership program.
Why it fits:
DoorDash shows how membership can be designed specifically to change purchasing frequency. Lower delivery costs can turn an occasional user into a customer who uses the platform several times per month.
That matters as DoorDash expands beyond restaurant delivery. A membership becomes more useful when the same subscription works for dinner, groceries, convenience items, and retail.
What stands out:
DoorDash said U.S. paid DashPass membership increased more during the 12 months through Q2 than during the previous 24 months combined. The company also says DashPass penetration and order rates tend to increase as customer cohorts mature.
In grocery and retail, DashPass members generated roughly 75% of U.S. orders during Q2.
What to watch:
Membership growth, order frequency, retention, grocery adoption, unit economics, international growth, and profitability.
The Takeaway: Buy this if you want the membership model with the clearest link between subscription and customer behavior. DashPass can make delivery habitual while helping DoorDash expand into broader local commerce.
The risk is that lower member fees per order only work if higher frequency and retention make up the difference.
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The Membership Can Be the Product
Costco made the membership model famous, but the idea now reaches far beyond warehouse clubs. BJ’s uses membership to deepen grocery loyalty. Walmart combines Walmart+ with delivery and Sam’s Club. Amazon uses Prime to connect an entire consumer ecosystem, while DoorDash uses DashPass to turn occasional delivery into a habit.
Thursday’s Costco report gives us the cleanest test of the model.
The key question is not how much customers pay to join. It is how much more valuable they become after they do.
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Elite Trade Club
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