What is the competitive advantage of thrift shops like Daiso

I had a 2 days good break currently from work. Well, make that 1.5 days since there was an emergency meeting this afternoon so I have to freaking be back in office.

I went to take a look at another nearby mall in Seng Kang and am surprised to find that there is a Daiso in Seng Kang! What is a Daiso?

Daiso sets itself apart from other 100 yen shops by choosing not to sell closeout or factory second merchandise. Instead, they keep prices low by purchasing directly from manufacturers in very high volume, a strategy often compared to Wal-mart. While the prices are low, and in many cases identical items are sold for more elsewhere, in some cases the quality reflects the low price.

Daiso often uses such locations as previous pachinko parlours for its retail outlets. They spend a lot of money on shelving and fixtures to help the stores compete with more high-end retailers. The stock of items retailed at each shop is varied frequently in order to increase repeat customers.^[2]

Daiso categorizes all its own-brand items on sale using the morpheme za (ザ), the Japanese representation of the English word "the", plus a category. For example, za hanabi (ザ・花火) is the category for fireworks, and za purasuchikku (ザ・プラスチック) is the category for plastic items such as plastic buckets or trays.

In 2004, Daiso also started selling items priced at multiples of 100 yen, such as 200, 300, 400 or 500 yen. Examples of such items would be children’s clothing or large toys. This may be the start of a change to competing with other-than-100 yen outlets such as Don Quijote.

Needless to say as a fan of productivity and organization, I am a fan of Daiso. In Singapore, every little to large thing sold in Daiso is SGD 2 dollars.

From what I learn from my friends, Singaporeans young and old, male and females find that there is always a need for shops like Daiso. But is there really money to be make in these thrift shops?

I think the moat for Daiso is really about the story behind Daiso rather a concept brought over from Japan to Singapore. The difference between Daiso and local thrift shops are a few things:

1. Larger floor space compared to cramp space
2. More items than traditional
3. The categorization of items

In summary, Daiso probably matches consumers needs, values much better than other shops.

What I find really great is that the solutions brought in are

1. innovative
2. large variety to cater to varied tastes
3. cheap at no more than 2 dollars

Take this 2 buck A4 size bag. Its got 2 zippers conveniently on top and below.

The unique thing is that there are velcros to turn it into an A5 bag. It is very ideal to put it in your handbag or another back just in case there are additional documents you need to bring back from work.

I manage to put my plastic folder into it. One thing folks will need to watch for is to find good quality ones. Since it is cheap, quality control could be a problem.

Another example is this 2 buck bag, which I use to put all my stuff should I not want to carry too much things to office.

You can always go for a more expensive one, but at 2 dollar and with the quality, it can last me a while before I go to daiso to get another one for 2 dollars.

In one lifetime you don’t usually stick with ONE bag forever.

So how do they earn?

Granted you have to evaluate the items you purchase. Not all of them are value for money. Some of the stuff could be vastly more expensive then outside.

That’s perhaps how they earn, some more cheaper they earn less some are more expensive so they earn more.

But in the end all of these are made in China! and so if you think 2 dollar is cheap they manufacture for probably 20 cents!

Conclusion

I can’t really post all the items since, they have too much goodies! Do make a trip down to take a look.

Here is a list of their branch here.