Everyone loves a good bargain!

October 19, 2006          Comments (4)

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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  1. Let me preface this by saying I read your blog often and am constantly nodding my head positively, admiring of what you say. I appreciate the time you put into your writing and enjoy checking GuruGilbert and seeing new entries. It is apparent that you genuinely want to help those who have the same entrepreneurial spirit that you do.
    After reading about your experience at the Dollar Tree and hearing your one sided thought on how people do not feel great about their purchase if it is “generic” or inexpensive, I must disagree with your bold statement. When referring to how people feel when we only pay $1 for a product you said “These are all thoughts that go through our minds” I disagree with the “OUR” and argue that this is what goes through YOUR mind, or if not your mind, then I presume you are talking about the minds of most people.
    I make a very nice living for myself and am a person who likes and appreciates nice things. If you were to look in my closet all of my Juicy Couture was bought on EBAY at half the retail price, my laundry room is stocked with all the Walgreens brand detergent and cleaners, my furniture is all used, even my comforter I waited to go on sale at Anthropologie for 40% off before buying it. All of my home accessories are from Home Goods or Target and my socks are 24 packs from BJ’s. I am just as happy (if not more) with my bargains as another person would be with their expensive purchases.
    Some people (like me) get a thrill from a steal and actually feel better about spending less than spending more. I get satisfaction out of buying the Duane Reade Adhesive Strips instead of Band-Aids and saving a whole $2, and buying Duane Reade wetting drops instead of Visine. Maybe you agree with me…maybe you don’t…I would be the person at the dollar store with my cart filled (with things I need of course) very excited about getting such a bargain and not caring who made it. Your quote: “It’s amazing to observe the two different extremes; lack of self control in buying expensive items and in buying cheap items” fascinated me. Some people cannot control themselves and buy things they cannot afford…those people I pity. Those people simply do not have their priorities straight (not to mention their finances!) and need to recognize that the expense of an item is not what will bring them permanent happiness. The thrill of an expensive purchase is temporary until they forget how good they feel and make another expensive purchase. It is a viscous cycle that only hurts them in the end. They need to realize that material does not determine success and that success is a state of mind.
    I see that you bought two things…so I am assuming you are an advocate of inexpensive things and have self control at the same time. I am wondering why you didn’t buy your necessities at the Dollar Tree while you were there. (ie:toothbrush, box of tissues, toilet paper, soap, shampoo, etc) When you do indeed need these things, are you going to travel a far distance to the dollar store OR spend an extra buck or two and go for the convenience at the Duane Reade or CVS that is on every corner? Keep up the good work…you have me constantly thinking.

    Comment by A.R.M — October 24, 2006 @ 1:02 pm

  2. A.R.M,

    I have no idea who you are but I really appreciate your very thoughtful comment and kind words!

    I agree with many things you said.

    As far as my bold statement saying “Our” as opposed to “My” I was referring to the people I was with. But, I also believe ‘we’ have been groomed through advertising our entire lives that if a product is on TV and becomes and is a name brand than it’s better than any generic.

    As my team member was stuffing her cart with items (34 of them but who’s counting) she kept saying things like, “Something has to be wrong with it,” “It won’t last,” “You get what you pay for,” “It’s definitely spoiled.” Those are all statements she was saying as she couldn’t control herself and prove how effective advertising has been to make people really think that.

    As you pity these people I find it interesting and fascinating because this same girl was wearing shoes that cost no less than $300.

    As far as my shopping goes I wish there was a dollar store in NYC. I was in Delaware at the time and didn’t feel like bringing everything back with me. I happen to buy items like that at Costco in bulk but am certainly not too proud to shop at a dollar store.

    Your question if I would travel to a dollar store when I do need these necessities all depends. Would I drive 20 miles to save 10 cents on gas. Probably not.

    Time is money.

    Comment by Adam Gilbert — October 24, 2006 @ 5:46 pm

  3. Just wondering where you got your “60% of off-brand items” figure, and if you know it to be true specifically for Quaker oats – are they the same stuff, from the same place, as the off-brand oatmeal? Thanks.

    Comment by Adam — November 14, 2006 @ 7:14 pm

  4. […] This is nothing new. […]

    Pingback by Guru Gilbert » Life is one Giant Placebo — April 9, 2008 @ 7:06 am

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