How Does Dollar Tree Do It?

I don’t know how many of you have ever gone to Dollar Tree (in the US, of course). But some of the stuff there really seems to be worth more than a dollar. (With tax in Michigan where I live. But still.)

Just the other day I got a fairly large laundry basket. For a dollar. They also have faux Waterford crystal. Figurines, even food. Campbell’s soup. And it’s not expired. (Despite people warning me to check the date. I do. And it’s still okay.)

How do they do it? And will they have to up it to two dollars? And when?

About 20 years ago, dollar stores often had a multitude of dollar items. But inflation has since put an end to that. Not Dollar Tree though.

Oh, and I have to tell you this funny story. Some time back we were consulting with our tax lawyer. (That’s what he called himself. But he was setting up a trust for us FWIW.) And he said his wife warned him that he was not to get their anniversary gifts there. Because really you could, you know. Now that’s funny.

Again: how do they do it? And will they have to stop some day?


As was mentioned in that article, one way is by having much smaller sizes. For example, Dollar Tree sells A-1 steak sauce. Brand name. But in a smaller bottle than the supermarket. Wrapping paper is cheap, but only enough for one present. Etc.

Yep, they buy in volume. Huge volume amounts in very teeny-tiny containers.

If you want to get an idea of how cheaply they can buy stuff, take a look at this website, for a Los Angeles-based wholesale supplier to dollar stores. I expect that Dollar Tree is getting better prices than what’s shown here, just based on their larger volume.

And this is perfect for single people or those who just need something as a one off. There’s really not any in my neighborhood but it would be nice to be able to be these smaller sizes

In my experience they have smaller sizes of name brands (or odd flavors) and then generic stuff that is hit or miss. Some of the name brand food will be a smaller bag/jar/can and oftentimes is more expensive by volume than what you would get at Walmart or even a mid-tier grocery store. A lot of people who aren’t exactly poor shop in these stores, but poor people who truly struggle to part with a $1.55 for a can of soup can scrape together $1 for a can 1/2 the size. So it’s more about the entry level price than the value. A lot of housewares and cleaning items and similar stuff is generics where it really doesn’t matter and the markups are notoriously huge at regular or specialty stores.

A friend of a friend owned a company that provided pet collars to Dollar Tree. The wholesale prices were about 25-30 cents each unit. They were able to sell large quantities and could also use this contract to flush out less-popular colors, etc.

Maybe if that one present is huge. The rolls of wrapping paper I’ve gotten at Dollar Tree have been fairly generous, and a pretty good deal. Wrapping paper, greeting cards, etc. are pretty cheap to manufacture, and are IMHO overpriced at some other places.

Family Dollar pushed it’s prices over a dollar a long time ago.

I wasn’t aware that it ever was a true dollar store (the kind where everything, or at least most things, cost $1).

It’s been years since I’ve seen a dollar store other than Dollar Tree. There used to be quite a few of them around during their heyday (in the 90s?), and they were fun to explore because you never knew what you’d find. Nowadays it’s just the Dollar Tree chain, and most, though not all, of what you find there is the same from one location to another and from one visit to another.

Family Dollar is owned by the Dollar Tree. It’s where they put the over a dollar items.

Back when dollar stores first became popular, in the late '80s or early '90s, my recollection was that many of them, indeed, priced things specifically at $1 – Dollar Tree’s original name was “Only $1.00”, and there was a chain that operated here in the Chicago area called, “Everything’s $1”. I shopped in one of the latter a few times, and it seemed like most of their merchandise was overstock or clearance stuff, which they likely picked up at a deep discount.

My wife and I loved Five Below when one opened in the area, whenever that was, but it’s really just a dollar store with better lighting and larger sizes of the same crappy stuff.

But the extra $4 allows them to also have stuff like t-shirts and sandals and extremely low-quality electronic accessories. My wife went through earbuds like tissues when she was working outside as a gardener so she just loaded up on shitty earbuds from the $5 store.

It’s still a fun place to waste time in.

Yes, but they kept the dollar name.

It’s still a true dollar store now, from what I’ve seen. But I don’t buy a lot there.

Dollar General, which bought out Dollar Express, also isn’t a true dollar store any more.

There’s also overstock seconds. Let’s say that you have a company that makes those laundry baskets, and it costs you $2 to make each one, and they usually sell for $5. Nice, that’s $3 profit for each. But now suppose that you make a few too many of them. You could hold them in your warehouse until demand picks up, but warehouse space isn’t free. You could throw them out, and take a $2 loss on each. Or you could sell them to someplace like Dollar Tree, and still take a loss, but a smaller one. That’s almost always more profitable than throwing them away, and sometimes more profitable than warehousing.

The downside to the Dollar Tree customer, of course, is that you don’t always know what they’re going to have available. But heck, it’s all cheap, and they’re usually sited close to where their customers are, might as well go in and see what deals they have this week.

Look on Amazon for ‘plastic laundry baskets’ - the rubbermaid nothing-specials are sold for double digits prices. Ridiculous! This doesn’t even include the designer laundry baskets . Greeting cards, two for $1, compared to $5, $6, or $7 for a Hallmark card elsewhere. You can feed yourself pretty well for cheap, if your Dollar Tree has a freezer/refrigerator case…Dollar General has inexpensive EVERYTHING. Towels, blankets, sheets, pillows. Basic clothing , even larger sizes. Lamps, canvas folding chairs, pots and pans, floor fans. Basic groceries, including hamburger, eggs, milk, frozen shrimp, frozen scallops, ice cream, beer…it lacks fresh produce, but so what. Sure, it’s cheap made-in-China mostly, but for a single person, someone on a budget, for emergency runs, or before a snowstorm hits, it’s a lifesaver.

I imagine that’s the kind of thing where Amazon can’t compete with brick-and-mortar stores, because they’re cheap to make but expensive to deliver.

The Five Below near my house looked like a cross between Old Navy and Dollar General, and seemed to be aimed at families with grade-school aged children, as a place to pick up a quickie birthday gift, and they also had inexpensive/cheap household goods, and clothing that could best be described as disposable. It also played loud pop music.

I recently bought a bottle of Heinz 57 sauce at Dollar Tree, and while it was a smaller bottle, per ounce it was significantly cheaper than either size offered at the grocery store next door. I do wonder how Dollar Tree will deal with a period of high inflation. At some point they’d be in trouble. Will they rebrand as Dollar Tree Plus?