How Discount Store Chain ValuDollar Makes Money Despite Low Prices

When you walk past a ValuDollar store in Singapore, you will certainly see its multiple bright yellow signs that scream “Fire Sale!” and “Everything must go !!!”.

Authorities such as the Consumers Association of Singapore (CASE) and the Singapore Consumer and Competition Commission (CCCS) have called these endless sales deceptive marketing tactics and are in talks for tighter regulations on the price transparency.

Such an act is apparently considered an unfair practice, as companies promote items or services supposedly for a fixed period of time, but keep them on sale for much longer. As a result, consumers end up doubting that their purchases are actually on sale, with prices remaining low.

Either way, we have to admit that their “ tactic ” works – Singaporeans are drawn to this popular channel because of its rock bottom prices.

The inexpensive store, which has a myriad of outlets scattered across the island, offers household items ranging from shampoo to toothbrushes and all kinds of snacks and drinks, all at heavily discounted prices.

This begs the question: how does ValuDollar manage to stay alive and even be profitable, despite incredibly low prices?

# 1: achieve economies of scale

valudollar warehouse
Image Credit: Women Who Money

Economies of scale can be realized when the cost of producing goods is spread over a larger number of goods, which in turn translates into lower costs for consumers.

ValuDollar is founded by DD Private Limited, which is owned by Radha Exports. The latter is a supplier of high-quality, “affordable” consumer goods.

According to Radha Exports, it has 69 outlets across Singapore and its own warehouse with an area of ​​80,000 square feet.

The company has likely managed to achieve economies of scale by purchasing a large number of consumer goods in bulk and passing the lower costs on to ValuDollar.

The company also sells products all over the world, including countries like India, Malaysia, China, and Indonesia. By diversifying its sources, the company also has the advantage of always choosing the cheapest options.

# 2: Sale of “B-Stock” products

The budget prices offered by ValuDollar may also be due to the fact that many of their products may be labeled as “B-Stock” products.

“B-stock” products include those that could have defects due to the packaging or labeling process. These flaws can include scratches, dents, tears, or other minor imperfections. Despite these small flaws, the products are still safe for consumption.

Other products that might be labeled as “B stock” may include those that are approaching their expiration date.

expiration date
Image credits: Discover Magazine

Besides ValuDollar, many supermarkets, bakeries and food stores also practice reducing their prices at the end of the day to allow their stock to be emptied.

If you plan to consume the food before its expiration date, buying at such huge discounts is a win-win solution.

# 3: sell off-brand products

ValuDollar and other discount stores may import products from countries other than those from which the products originate.

For example, the Lindt brand of chocolate originated in Switzerland and is well known for being a relatively high end chocolate brand. How then is it sold for only S $ 2.95 at ValuDollar?

(For comparison, supermarkets like NTUC FairPrice, Cold Storage, and Giant sell a Lindt chocolate bar for around S $ 6)

lindt valudollar chocolate
Image credits: Money Smart

Instead of importing Lindt chocolates from Switzerland, the store may have imported them from countries like the Philippines, Indonesia, or Malaysia.

The ingredients could then be of lower quality than its Swiss counterpart, which would also allow them to be offered at a very favorable price.

# 4: enter the gray market

gray market
Image Credit: Jaztime

Most of us have heard of the black market – but what about the gray market?

Unlike the black market, gray market products are perfectly legal. It refers to products sold outside of distribution channels approved by a brand.

For example, a distributor authorized to sell their products to a supermarket chain like NTUC FairPrice may contact discount stores like ValuDollar when they have additional inventory.

These additional stocks can be sold at a significant discount, but still allow the distributor to earn money quickly.

Maximize your savings at ValuDollar

Sometimes the offers found at ValuDollar may seem “too good to be true”, so use discretion before buying.

Either way, ValuDollar and other discount stores are undoubtedly well received by Singaporeans as evidenced by their rapid expansion into various neighborhoods and malls across the island.

Whether it’s shopping for household essentials or buying bulk branded chocolates for gifts, ValuDollar is always able to give consumers value for their money.

Featured Image Credit: Vulcan Post

Our sincere thanks to
Source link

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *