I’m back in Delaware this week. Two weeks in Wilmington, Inc, is a long time. Thankfully, my team likes to explore.
We wound up in a $1 dollar store. It wasn’t just any old dollar store. It was the most well run, clean dollar store I’ve ever been in. You wouldn’t know it was a $1 store if they ripped down all the signs. That’s how nice it is.
A well run $1 store’s profit margins must be astronomical. Let’s say they buy the average item for 30 cents, which is very high, their margins are 70%. They certainly had the volume.
This store also had brand names. Brand names! Between their foods, toothpaste, towels; they had a lot of recognizable names. I was amazed at how cheap everything was. Being in a place like this could be costly. Everything looked so great.
The power of a good bargain!
I started questioning if I needed a pizza cutter. I began contemplating whether I needed new forks and knives for my kitchen. Ooh, “I could use an oven mit.” “Look at that, a can of Doritos.” That’s right, a can of ‘em! “You know what, I could really use a new soap holder…”
“It’s only a dollar how can I not buy it?”
A girl on my team spent $34. She bought 34 items at this store!?! I was flabbergasted. My other team member spent $16 on the most useless things. He won’t use a single thing he bought. I’ll bet you a dollar.
This store appeared as if it were a regular store with every product someone could ever need.
How much more are we actually paying for a brand name? 60% of generic brands are manufactured in the same factories that are making the ‘known’ brand name items.
Is the baby powder that soothing? Are the hot dog buns not made with the same flour? Are the chocolate bars made that differently? Are the chemicals that different in the generic laundry detergent?
The large manufacturing companies figure they might as well under cut themselves. They’ll make their products for the big guys and then make the same exact product with a different label for the generics. If they don’t do it, someone else will. Private labeling has become a huge business for these companies.
The name brands were in this store because they couldn’t sell elsewhere. Whether it was a misprinted label or a huge over shipment, regardless, they made it to the product pawn shop. We buy your junk and sell it for a 60-95% premium.
“Everyone’s trash is someone else’s treasure,” which reminds me of Ebay.
Why don’t we feel as good about a product when we only pay a $1 for it? “Something has to be wrong with it.” “It won’t last.” “You get what you pay for.” “It’s definitely spoiled.” These are all thoughts that go through our minds.
These are the ideas that marketers try to instill in us. And have, so effectively. When we buy certain brands, we aren’t just buying the product.
We are buying the religion, we are buying the idea, we are buying the coolness factor, we are buying the founder, we are buying the status, we are buying the commercial, we are buying the lifestyle, we are buying the ‘quality’; ultimately, we are buying what makes us feel good.
We pay a lot of money to buy a laundry detergent that’s been on TV 13,902,432,493,093 times. You could also pay $1 for a pair of sweatpants that came off the same assembly line as Juicy Couture. Clearly, that wouldn’t feel as good.
We believe if it’s been advertised on TV it has to be a good product. If it’s expensive it has to be good. If celebrities are wearing it then I want it too. It makes us feel good inside.
Companies like Proctor & Gamble and Unilever have done a magnificent job convincing us that it’s worth 300% more, to buy Tide as opposed to buying the generic brand.
Maybe it’s how we grew up. Most people buy things based on emotions as opposed to rational thinking. Emotionally, it feels good to buy a recognizable brand for many intrinsic reasons. Rationally, you know you can buy the same exact thing for $4 or $150 less.
It’s amazing to observe the two different extremes; lack of self control in buying expensive items and in buying cheap items.
So what did I buy?
I only bought two things.
An umbrella and holiday cards.
The holiday cards look and feel exactly as a normal card does. I searched to find a mistake. No mistakes were to be found.
It came 12 cards in a box for a buck.
That comes out to 8.3 cents per card.
It’s the thought that counts though, right?
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