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The economics of dollar stores

thehustle.co

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Re: The economics of dollar stores

#31
post #26

Earlier quoted context omitted.

You could just shop in China yourself (AliExpress)

Sure, and wait a month for an empty box to show up

AliExpress has escrow. You are essentially less likely to be screwed than with Amazon (no escrow, and still many shady sellers)

I also never had empty or wrong products show up, and I shop nearly everything that is made in china anyway directly from ali. And assuming it would happen, I just get my money back thanks to escrow.

Re: The economics of dollar stores

#32
100 yen (approx $1) have long been huge in Japan too, and their business model is even simpler: most of what they sell is plastic and made to order in China in huge volumes. They have grocery selections too, but nothing that would require refrigeration or otherwise spoil quickly. And while hardly luxury, they're also not down-market in the way that Dollar X's in the US are, many are located in central business districts and there's no stigma to shopping in one.

https://en.wikipedia.org/wiki/100-yen_shop

Re: The economics of dollar stores

#33

Earlier quoted context omitted.

I realize the article mentions that sometimes happens, with their example being a 0.8oz deodorant. But as a frequent shopper it isn't my general experience. I often compare prices and on a unit cost basis (so controlling for the sometimes smaller dollar store quantities) you can almost always buy the same brand from a dollar store for a steep discount compared to a traditional supermarket or Target. In general I feel…

>>That's sometimes merited (payday loans!) That's also a very interesting discussion to have because from what I understand, payday loans businesses exist because the alternative is worse - people who are desperate will always borrow money from someone, so it's better that they borrow from a well regulated business rather than from the "pay or we'll break your legs" kind. And then the 1000% APR is argued that it's th…

The worse alternative is sleeping on the streets when you can't pay your rent. While I do think payday loans are evil, I recognize why they exist. I would prefer a much more robust housing support system for lower income people. Almost all of society's problems could be fixed with more affordable housing. For example let's say you have abusive parents, if affordable housing exist the moment you turn 18 you can up and leave. But now you have bizarro programs which will stop you from attending college if you get "affordable housing"( government subsidized). When I was young I was able to find a $600 apartment, on the free market. Now the same place is 1200$.

On the other hand, rent-a-centers are disgusting. I remember when I was a kid I had calculated they wanted me to pay something like $3,000 for a $500 laptop. But the idea is you only need to give them $50 a week. I went and saved my money and found the absolute cheapest laptop I could, paying cash for it.

On a larger level, car loans are also extremely exploitive. No one needs a car which cost more than $20,000, but all these shiny ads show girls will swoon over you, men will respect you, as long as you buy a car which is $75,000 + tax and destination.

Re: The economics of dollar stores

#34

Earlier quoted context omitted.

That's not "expensive". Expensive is that I need to pay $1.99 for something and I have throw away half of it because I couldn't use it. I'd rather spend $0.99 for 1/3 the quantity. I am spending less money after all.

I think this point is underappreciated. Sometimes it definitely makes sense to pay more per unit/kg for some item for a smaller quantity if otherwise you'd be throwing out an excess

At some point I bought a sampler set of miniature colognes from one of the big makers (CK I think). Probably 5 x 5ml or something. Dirt cheap, and perfect for traveling. Turns out 5ml of cologne is enough for years and years if you use it rarely and sparingly (as you should). The huge 50 or 75ml perfume bottles must be one of the products most often thrown out without finishing.

I bet CK thought these sampler sets would create incentive to buy one of their larger bottles, not make customers set for life on cologne.

Re: The economics of dollar stores

#36

Ah, I see, so they make quite a bit of their profit by selling smaller quantities of lower quality goods at higher per unit prices through framing the value proposition carefully and managing expectations to their benefit. Makes sense, given the markets they target, that they're exploiting the effects of the 'Boots' theory of socioeconomic unfairness and quite successfully too.

I realize the article mentions that sometimes happens, with their example being a 0.8oz deodorant. But as a frequent shopper it isn't my general experience. I often compare prices and on a unit cost basis (so controlling for the sometimes smaller dollar store quantities) you can almost always buy the same brand from a dollar store for a steep discount compared to a traditional supermarket or Target. In general I feel…

> buy the same brand

That doesn't mean they're the same product or quality, however.

Re: The economics of dollar stores

#37

Ah, I see, so they make quite a bit of their profit by selling smaller quantities of lower quality goods at higher per unit prices through framing the value proposition carefully and managing expectations to their benefit. Makes sense, given the markets they target, that they're exploiting the effects of the 'Boots' theory of socioeconomic unfairness and quite successfully too.

I realize the article mentions that sometimes happens, with their example being a 0.8oz deodorant. But as a frequent shopper it isn't my general experience. I often compare prices and on a unit cost basis (so controlling for the sometimes smaller dollar store quantities) you can almost always buy the same brand from a dollar store for a steep discount compared to a traditional supermarket or Target. In general I feel…

Similarly in the UK, whilst there are certainly £1 store offerings from brand names which are smaller than their traditional supermarket offerings, the vast majority of products are end of line or bought up cheaply in bulk where they otherwise we're not selling. I have had success in the past finding items which I have resold on eBay for significantly more because their true value is higher.

Re: The economics of dollar stores

#38

In the UK we have poundland which is the same idea. To be honest I love it. I get protein bars, chewing gum, cans of coke, milk and sweets cheaper than anywhere else.

From what I understand, a lot of the Poundland goods are grey market parallel traded goods. e.g. Colgate toothpaste manufactured in the UK but intended to be distributed in Poland. The manufacturer often sells them at a lower margin in lower income markets because some money is better than none.

Re: The economics of dollar stores

#39

Earlier quoted context omitted.

I realize the article mentions that sometimes happens, with their example being a 0.8oz deodorant. But as a frequent shopper it isn't my general experience. I often compare prices and on a unit cost basis (so controlling for the sometimes smaller dollar store quantities) you can almost always buy the same brand from a dollar store for a steep discount compared to a traditional supermarket or Target. In general I feel…

> buy the same brand That doesn't mean they're the same product or quality, however.

I don't think a brand will change their recipe or reduce quality of components, when simply resizing is easier.

If they wanted to do that then they would be better off creating a different lower cost brand, rather than a new manufacturing process for $ store items.

Re: The economics of dollar stores

#40
post #31

Earlier quoted context omitted.

Sure, and wait a month for an empty box to show up

AliExpress has escrow. You are essentially less likely to be screwed than with Amazon (no escrow, and still many shady sellers) I also never had empty or wrong products show up, and I shop nearly everything that is made in china anyway directly from ali. And assuming it would happen, I just get my money back thanks to escrow.

I was still screwed, couldn’t get a refund on a 10 USD USB-C headphone adapter that hissed with my iPad. They claimed they couldn’t hear it on the video I submitted, and there was no possibility to protest or submit a new recording
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