120 Days of Retail: Day 49 - Why the Founder of Costco Threatened to Kill the CEO Over a Hot Dog

This is part 49 of a 120 day series on validating our product ListIt, a digital storefront for independent retailers to sell their inventory online for free. You can see the whole series here.

As the story goes, the CEO of CostCo Craig Jelinek once went to one of the Co-founders, Jim Sinegal and told him they couldn't afford to keep the prices of hot dogs so low. Jim's response? "I'll kill you".

“I came to (Jim Sinegal) once and I said, ‘Jim, we can’t sell this hot dog for a buck fifty. We are losing our rear ends.’ And he said, ‘If you raise the effing hot dog, I will kill you. Figure it out.’ That’s all I really needed. By the way, if you raised (the price) to $1.75, it would not be that big of a deal. People would still buy (it). But it’s the mindset that when you think of Costco, you think of the $1.50 hot dog (and soda)."

- 425 Business

The reason this is such an impactful story and important for business is that sometimes you do need to keep prices low to provide a great value to your customers.

From the beginning, the idea with ListIt has been to not charge local stores a thing, and to only charge customers 10 cents to use us. Actually putting this into action, however, is pretty hard.

Most entrepreneurs and software developers at the growth stage of their business use a payment processor called Stripe. Stripe allows a developer to easily put a piece of code in their application in order to take payments without having to know a bunch of the compliance stuff that people usually need to implement to get to that stage.

And lots of people use payment processors like Stripe. They charge rates similar to what credit card companies and POS systems like Clover and Square charge- about 30 to 40 cents per purchase PLUS a percentage of the purchase.

We here at ListIt feel this is crooked, fiendish, and not providing a lot of value for the end customer. That extra charge is either coming out of the pocket of the shopper, or out of the pocket of the business. Either way it affects how much people buy by increasing the price.

All of this is why we're delaying the launch of our core web application until later in the month. We could do what the other people do and simply throw Stripe into our application- but then we wouldn't be able to only charge 10 cents per order on ListIt.

At some point ya gotta take a stand. We're in our Costco hot dog era.

Look for the announcement of our MVP launch before the month is out! April 2023 y'all.

ListIt is the Buy Online Pickup In-Store solution for local retailers. It’s free and takes only seconds to upload your first product. Reach out to me directly at james@listit.one