Increased Prices Due To The Middle Man

Almost everyone in the United States relies on retail stores for various purchases throughout their week (even if only when it comes down to purchasing groceries to feed their families). And while prices may often seem like a pretty decent deal for the consumer, the fact of the matter is that prices at retail stores are not as low as they could be for the consumer.

The reason for this is simply that retail stores rely on a “middle man” to supply the various products that they then are able to sell in their stores. Essentially, while retail stores are great at providing consumers with a wide range of products that they can buy all in one place, the real cost of producing each and every individual good in their stores is much too high for them to produce all of their offerings on their own.

Instead, what retail stores do is work with producers of various goods to get them their inventory for their stores. These producers have the advantage of specializing in just one or a few different types of products, meaning that they can sell them in bulk to retail stores. However, the problem comes due to the fact that the effective supply chain now adds another step in the process in the form of these “middle men” who like the retail stores themselves are trying to make a profit on what they sell.

Because of this, retail stores are not just marking up the true price of the products themselves, but rather marking up the price that was already marked up by the wholesalers in order to sell those products in bulk for their own profit. To take a very simple example, if a product costs a wholesaler $1 to make, they might want to sell the products at $2 apiece to the retail store. However, because the retail store just paid $2 for each product, they have to sell it at something even higher so they also make a profit – maybe something like $3.

This ultimately means that as the end consumer of the product, instead of potentially paying juts $2 for the product, you end up paying more (in this case $3). This is an inevitable side-effect of retail stores that rely on other suppliers to fill out their inventory. While it may not seem like a big deal to you in the moment, considering that prices appear to be relatively inexpensive, the reality is that those costs do add up over time, whether you realize it or not. There’s a reason why so many people shop at Costco, which is effectively a wholesale store selling bulk products directly to consumers to help save them money (although some people end up spending more money than originally intend to due to Costco’s sneakily ingenious business tactics).

So while retail stores may appear to be giving you great deals, always keep in mind that due to the inherent “middle man”, you are inevitably looking at increased prices across the board. Whether those prices are significant enough for you to look at wholesale stores or other means of shopping are totally up to you.