Volume. Its all relative to your less efficient competitor

Didn't Costco get volume by selling things cheaper then they could have?

They also have less items for sale so each sells more.

People with Costco memberships view shopping as a sport. Instead of golfing, they go buy shit and eat hot dogs.

They do have the best hot dogs.

Where both shopping and golf are about getting a low score ;)

Costco makes the majority of profit from membership fees, they've already profited from you before you have even made your first purchase. Arguable any profit they make from what you purchase is where you are being 'ripped off' but because the savings and return policies are better than the competition they avoid the 'pissing off'.

Isn’t a membership like $35 a year?

$60 or $120

Are you sure about that? Their average markup is around 10%, so that would mean that the average member would be spending $600 or less in the store per year.