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The company's inventory strategy plays a critical role in its efficiency. With a significantly reduced number of SKU (Stock Keeping Units) compared to competitors like Walmart, Costco minimizes decision fatigue among shoppers, pushing them to make quicker purchasing decisions. Furthermore, Costco boasts a high turnover of its inventory, selling through its stock over 12 times per year, which is substantially higher than competitors. This rapid turnover, coupled with favorable purchasing agreements with suppliers, allows Costco to operate without heavy debt reliance.