Costco is leaning into its Netflix-style membership crackdown

Although Costco is the third-largest retailer in the world, it actually makes most of its profit from membership fees.

It’s official: Costco ID scanners are here to stay, with more coming to warehouses across the US “over the coming months.”

“Once deployed, prior to entering, all members must scan their physical or digital membership card by placing the barcode or QR Code against the scanner,” the company said in a note on its customer service website.

And this is not a case of a machine taking a person’s job, as the company says there will still be a Costco employee at the door to greet and assist customers as needed.

Back in January, B-17 reported on one of the earliest digital ID scanning stations at the front door of a Costco warehouse near the company’s corporate headquarters in Issaquah, Washington.

A Costco employee scans a shoppers ID at the entrance to the company’s warehouse in Issaquah, Washington.

Rather than flash their ID’s thumbnail-sized picture at an attendant, shoppers instead scanned their card or app to display their membership status and a large version of their member photo on the tablet.

The Issaquah location is generally known to be where the company tests out new concepts before rolling them out more broadly.

The move extends Costco’s Netflix-style crackdown on unauthorized membership sharing that started last year.

Costco said at the time, it had noticed an increase in shoppers using cards that weren’t theirs, especially when checking out at the self-service lanes.

Although Costco is the third-largest retailer in the world, it actually makes most of its profit from fees from more than 74.5 million members.

The company reported nearly $4.6 billion from membership fees last fiscal year, representing more than half its operating income, and more than 90% of members renew each year.

Starting September 1, the annual fee will increase from $60 to $65 for Gold Star memberships, with Executive memberships going from $120 to $130 — the first fee hikes in seven years.