The Real Reason Why Everything at the Dollar Store Is So Cheap

Everyone loves shopping at the dollar store. Whether you prefer Dollar Tree or Dollar General and whether you’re stocking up on seasonal décor or kitchen staples, dollar stores are chock full of bargains you won’t find anywhere else.

But have you ever stopped to wonder why everything at the dollar store is so cheap? It’s not like these retailers can afford to sell merchandise and not make a profit. How do they charge so little and stay in business? The answer to this common question may surprise you.

1. Quantities might be smaller

Travel size beauty products

Travel-sized products | JulyProkopiv/iStock/Getty Images

When’s the last time you saw a store selling a single roll of toilet paper? Probably at the dollar store.

One reason that dollar store merchandise is so cheap is that they often sell smaller quantities than traditional retailers. That means you aren’t always getting the best deal — even if you’re only paying a buck.

It takes a bit of math, but calculating the price per volume can help you establish whether you should spend $1 on a small bottle of shampoo or $10 for the economy pack at your local warehouse club.

Next: Here’s how to get the most bang for your buck.

2. They carry private label merchandise

Supermarket Aisle with product on Shelves

Aisle with shelves | Kwangmoozaa/ iStock/Getty Images Plus

One way that discount grocers like Aldi and dollar store retailers save money is by offering their own private label merchandise along with national brands. You might find name brand dish soap right next to a larger bottle of an off-brand version you’ve never heard of. That’s because dollar store buyers can get private label items cheaper and offer them to consumers for less.

Next: Don’t expect your purchases to last forever.

3. Items may be cheaply made

Vintage toy cars

Toy cars | Getty Images/Apion

You don’t buy dollar store toys expecting them to last forever, right? When it comes to dollar store merchandise, you often get what you pay for, and items made from cheaper plastics or other subpar materials are more likely to break after a few uses. It’s up to you to decide if you’d rather purchase a heavy-duty spatula for $10 or replace the dollar store version ten times when each one inevitably breaks.

Next: Here’s one big way dollar stores save money.

4. They get volume discounts

warehouse stock boxes

Warehouse stock | urfinguss/iStock/Getty Images

Both Dollar Tree and Dollar General are huge companies that purchase large amounts of inventory at a time. That’s one way they’re able to sell everything so cheaply — the more they order at one time, the less they have to pay for each individual item.

Next: This is one reason to be wary of the stuff you buy at the dollar store.

5. Your purchase could have toxic chemicals

Shower curtain on shower curtain rod

Shower curtain | iStock.com/fusaromike

Cheaper plastics aren’t just more likely to break while you’re using them — they may also contain harmful chemicals that could be toxic.

Stop to consider what you’ll be using the item for. When it comes to toys, utensils, serveware, and anything that comes in contact with your skin or food, those potentially carcinogenic chemicals could have harmful effects that aren’t worth the cost savings.

Next: Always check this detail on whatever you buy.

6. Some items are only for decoration

Dollar tree table setting

Dollar Tree table setting | Dollar Tree via Facebook

Before you serve appetizers on that party plate, stop to make sure it’s food safe! Certain items at the dollar store are cheap because they’re not made with food safe materials (which are obviously more costly to use).

You’ll usually see a sticker that says, “For decoration only — not intended for food.” That fancy plate you were eyeing might not be a bargain after all.

Next: Aldi and Dollar Tree have this in common.

7. There are a limited number of products

Dollar Tree window

Dollar Tree | Paul J. Richards/AFP/Getty Images

Your neighborhood dollar store probably has a more limited selection of items compared to Walmart, Target, or even the grocery store. The smaller the store, the less inventory they have to stock, and the cheaper the prices they can offer.

Next: This type of item is a great purchase at the dollar store.

8. Product turnover is quick

Dollar General

Dollar General register | Excel23/Wikimedia Commons

It costs money to keep merchandise on hand. At Dollar Tree especially, seasonal merchandise only lasts for a few weeks before it gets replaced with new items. The constantly changing assortment helps store owners keep the prices low.

Next: Here’s another way they keep costs low.

9. The stores aren’t large

Dollar General aisle

Dollar General aisle | Excel23/Wikimedia Commons

One bonus to not having a huge assortment? The physical store locations are smaller, so it doesn’t cost as much for utilities and other store associated costs. The less the store owners pay for all those extras, the less they can charge for merchandise — and still make a profit.

Next: These are the types of items you’ll find at the dollar store.

10. They sell high margin items

dishware

Dishes | artisteer/iStock/Getty Images

There is a reason that you’ll find certain categories of items in just about any dollar store you frequent. Certain types of products — like glassware, for example — often have a high margin and can be offered for low prices. That’s one reason everything at the dollar store is so cheap.

Next: This is how employees help keep prices down.

11. Employees aren’t paid much

Portrait of woman cashier smiling

Cashier | Wavebreakmedia/Getty Images

Dollar store cashiers and stockers are usually working for minimum wage. If you’re looking for a high-paying career with lots of opportunity for advancement, it’s best to go elsewhere. Working at the dollar store is a great option for high school kids or retirees, though.

Next: This type of item is less expensive.

12. They buy overstocked items

Candy corn

Candy corn | tab1962/iStock/Getty Images

Halloween candy — in April? Yes, dollar store buyers often purchase overstocked inventory from other retailers at steep discounts. Then they resell their purchases for much cheaper prices. Shopping the dollar store for this type of merchandise can be a great way to save on brand name items.

Next: This is why you shouldn’t buy everything the dollar store offers.

13. Not everything is worth the price

woman shops for cleaning supplies

Shopping | Jean-Francois Monier/AFP/Getty Images.

A dollar saved is a dollar earned. If you weren’t planning to purchase an item in the first place, then don’t buy it just because it costs a measly dollar. Shopping at the dollar store can save you some cash, but only if you’re shopping for stuff you were going to purchase anyway.

Next: You can pay cheaper prices elsewhere.

14. Their dollar offerings aren’t always a good bargain

Dollar Tree store

Dollar Tree | Wolterk/iStock/Getty Images

Some things at the dollar store aren’t worth a dollar — in fact, sometimes you’ll find the same item for cheaper somewhere else.

It can be tempting to purchase everything you like at the dollar store because it feels inexpensive. But sometimes if you take a little extra time to compare prices, you can find the exact same item cheaper somewhere else, especially when you purchase larger quantities. Don’t assume the dollar store is always the cheapest retailer. After all, they’re just trying to make money like everyone else.

Next: This surprising detail contributes to the cheaper prices.

15. There’s a no-frills atmosphere

Shopping at the dollar store may be inexpensive, but it’s not exactly beautiful. The stores are incredibly bare bones with basic shelving, fluorescent lighting, and industrial carpeting. They’re often not the cleanest places, either.

Taking a no-frills approach to décor means store owners don’t spend as much on ambiance. Those savings are passed on to customers like you.

Read more: 15 Secrets Dollar Store Shoppers Need to Know

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