Trader Joe’s Cuts More than Apples

Have you been to Trader Joe’s? You might have noticed that this chain is just a bit different from other grocery chains. And by a bit different, I mean vastly. As a matter of fact, they basically take opposite actions to the competition. Since Trader Joe’s Business Model is something that I’ve been looking into recently, I will now tell you more about their key concepts, including vertical integration to cut down costs.

Key Concepts

Economies of Scale is the key term. Even though Trader Joe’s has fewer products in every category on offer, they can afford to charge lower prices. While most of us would think that bigger stores have more budget to spare, those have high overhead costs as well. In contrast to that, Trader Joe’s manages to cut those costs down by keeping smaller stores. By circulating less products, the chain achieves a higher bargaining power with their suppliers, which they are able to use with their suppliers.

Vertical Integration at Trader Joe’s

As a consequence, Trader Joe’s distributes its products at a lower cost as well. Less space and less overall investments mean they can pass on their own savings to their customers. On top of that and probably the most important point, they aim at cutting out the middle man completely by purchasing their goods directly from manufacturers. This concept of vertical integration has been utilized by Hundred Dollar Suits as well. By shortening the chain of different individual institutions who are involved in the acquiring logistics process, many expenses are just cut completely. This is a clever way to prevent the keystone markup.

Personal approach

The third point is Trader Joe’s personal approach. In case you can’t find a product, someone will help you and will literally guide you to the right shelf. Achieving a personal approach in an online store is not easy, but there are two ways we take: First, our blog is something that keeps you updated on everything about suits. Secondly, our contact form allows you to chat with us.