General Question

occ's avatar

How is Trader Joe's so cheap?

Asked by occ (4007 points ) September 7th, 2009

How is it possible for TJ’s to keep their costs so low? How do they sell high-quality products that are so much cheaper than their competitors’?
Also, all or most of the products are Trader Joe’s own brand – but I’m guessing they don’t actually manufacture anything…how does it work?

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10 Answers

SeventhSense's avatar

Well it’s an exact product line that is directly manufactured exclusively for them and they probably have entire manufacturers who rely upon them for their livelihood. Furthermore they use flash frozen fish and meats which lower loss costs.

Supacase's avatar

I don’t know, but it costs me a lot to travel far enough to shop at one. I wish they would expand their area. Even a 2 hour drive would be a huge improvement over the current 6.

kevbo's avatar

They pay cash for everything.

DominicX's avatar

@Supacase

That’s crazy. We have so many Trader Joe’s’ over here, it’s overwhelming. I wish I could give you one of them. I love Trader Joe’s. :)

YARNLADY's avatar

According to their newsletter, they buy the entire stock from their providers and that gives them a quantity discount, which they can pass along to the customer. It looks like they deal directly with the vendors, which means they can see that the quality is up to their standards.

jrpowell's avatar

http://www.traderjoes.com/action_issues.html#Traded

12. Is Trader Joe’s publicly traded?
No. Trader Joe’s is a privately held company.

Better stuff for less money if you remove stockholders from the equation. That could work for healthcare.

Jeruba's avatar

I think they do some private branding of OEM products. That means making a deal with some manufacturer—let’s say General Mills—to put Trader Joe’s brand name and packaging on their product. So let’s suppose they make a deal for Cheerios, and package them under the name Joe’s O’s, but they are the same product. Trader Joe’s can sell them for less because they do not have to figure in an advertising budget just for this product; it gets the sales advantage of advertising the Trader Joe’s brand. Once people are in the store, they can see the bargain products (deliberately packaged with enough similarity so it’s not hard to guess who OEM’d it).

I can’t say that they do in fact do this; I am not privy to their arrangements. But this is how it does work for a lot of products in the marketplace. Sometimes they give you hints on the shelf labeling; for example, a label under Walgreen’s brand Wal-Dryl that says “Compare Benadryl at $~~.” That’s as good as telling you they’re private-branding the Benadryl product.

casheroo's avatar

I don’t know, but I miss shopping there!! We saved soo much money.

catlingmex's avatar

I was surprised to see Tj’s merchandise referred to as “cheap.” Buying stuff from Trader Joe’s is an infrequent treat for us, since it costs considerably more than what we usually get from our local big box supermarkets and farmer’s markets.

jca's avatar

some things appear cheap but when you look at the number of oz per box it’s not that cheap. i bet if you did an item by item analysis of prices you’ll find that most things are not that cheap. i like TJ’s too, because you can buy things for like $1.99, but not that big a quantity – for real cheapness, i go to Costco.

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