Aldi's special buys are sometimes ridiculously cheap. Even if they buy in bulk across Australia, the quantities are quite small. I realise some electronic items, etc., are supplied globally.
So I was wondering, does anyone have any insight into whether this is a loss leader for them or they still make something from it, say over the course of a year.
if the quantities are small, its probably a loss leader, or slim profit
They get you in the store, you buy other stuff and they make profit.
I bought 30 meter hose from Aldi keeps burting after 8 months. bought 2 garden hose spay guns both broke first year. bought tennis rackquet broke. etc etc etc. So my thought are there making a killing, there cheap for a reason. they keep opening stores. google Aldi profits australia and you get "Aldi eyes $2bn expansion as chain outperforms rivals"…Cheap is not quality and quality isn't cheap!…Ill still shop there mind you.
Yea, similar experiences with other things. The economics of scale and specialisation hasn't been triumphed by aldi. Aldi simply cuts on quality to get these low prices. Too many broken aldi products in our household.
I buy stuff there were I know i dont really care about quality. Either its that cheap or I know I won't be using it for long.
Have yet to see anything of decent quality.
It's cheap made in China stuff.
And yes, they are certainly not a charity organisation :P
I've worked for a company that has supplied some of their special buys. On every occasion our cost price to them was well under the price that they sold it to customers. While they may do loss leaders for certain items, it isn't my experience, they are more likely to ask the suppliers who are tendering to spec down the product (using a cheaper plastic, a cheaper battery, less accessories, etc.) to meet a certain price point rather than lose profit on the item.
Also regarding the purchase being global, it generally isn't the case for special buys. They prefer to have suppliers based in Australia for warranty issues, because the supplier must replace any faulty items and not Aldi themselves. So for every 1000 items you supply Aldi stores, you need to keep say 10 in stock in an Australian warehouse for 12 months for replacements. Global suppliers generally can't offer that, so Aldi Australia sources their own local suppliers.
The thing to remember is that Aldi's business model is very different to Coles and Woolies.
For starters they spend next to nothing on TV and Radio advertising. Their shops are 1/3 to 1/4 the size, they employ less staff, they don't supply plastic bags… I could go on.
Also, look at the quarterly profit of say, Woolworths. Their NET profit for 2014 was just shy of 2.5 BILLION dollars.
So, to answer your question, "Do Aldi make money on their special buys?" The answer is, yes, absolutely.
But what they don't do is make enough profit to boast a multi billion dollar EOFY report card.
What? I see tonnes of aldi adds on Tv, sure not the same amount, but cocommensurate to their size. They sell stuff cheap coz they ask suppliers to make a cheaper product. Often a poor quality product that breaks easily,from experience.
I've bought a handful of items which have broken, but the overwhelming majority of the stuff I've bought from Aldi has been super value.
For example, I bought drill there for about $50 years ago which is still going strong - my dad even commented about what a good drill it was.
All their clothes are great value too.
Their exercise and weight equipment, not so much. It's definately worth paying more for that sort of thing.
We had a power tool that was occasionally used, and pieces just snap and broke after 6 months.
Yes, my experience has been good too. The clothes/underwear are great, the quality is so good for the price. Once in a while I might buy a dud thing, but I have had the same experience from Kmart for example and top name brands. Cosmetics and skin/hair care are another winner at Aldi. Funnily enough suppliers are fond of Aldi too, so that makes me happy my money isn't going to screw them (the suppliers). The back to school specials recently were brilliant. Of course im preaching to the choir here I know :)
Aldi have SOME ok stuff (not food - manufactured products, I mean). But it takes a (mildly) trained eye to pick the difference. Some things I've mentioned on here before:
MORTAR & PESTLE - they regularly get - dark grey. We have a couple of them. Only because I had been looking other places and could tell it was made the same place as another one by the cut/colour/size/etc. But many had a "lump" of unfinished rock in the bottom centre, and/or chunks taken out where spices would get stuck. Others had fractures in the pestle you could see would split over time or with a bump or drop on the bench. I not only had to open nearly every box there (about 30 of them) to find just two good pairs, but I had to take mortars & pestles from different boxes to do so. They've been ok, but I admit we've only used them about 6 times too.
PRESSURE COOKER - Very poor quality. In particular the handle. Where it screws on the plastic is thin, the screws are skewed in all kinds of weird directions… I expect most handles to crack around that screw area and the handle come free within a 12-18 months. I'd be very gentle even washing it. Keep it out of the sink, so you're not tempted to wedge the handle against the side, and don't turn the handle say against the back of the sink, to keep it from moving around while washing either.
Electric TOOLS - won't even buy them because it's not much more to buy something decent. Just get some tool catalogues or emails and be patient. Or check Bunnings - my local one often buys in too many tools, then puts them on sale for ridiculous low prices to make room.
Non-electric TOOLS - most are terrible quality. Pliers that don't line up, poor quality metal, screw extractors that it's obvious would snap, levels with bubbles not even glued in straight, LOL!
BATHMATS - bought one, I mean - how could they muck that up, right? Well they did. The rubber began to stick to the floor within a few weeks, causing it pull itself to pieces. I didn't even take it back for a refund, as I wanted to forever remember - don't buy Aldi if you know you can get better somewhere else.
NOTE: I think if it keeps up, Australia will SINK from Aldi/Kmart/Target/etc. landfill.
ICE CREAM machine. Warned in instructions it "might turn off if motor overheats." What!? Sure enough it made ONE good batch of ice cream. Used it again the next day and motor kept turning off. Obviously it was such a common problem, they felt they needed to mention it in the instructions!
MEDION USB RAM STICKS - copied files, removed from computer, remembered I wanted to copy something else, plugged it back in, stick dead! Just as well I hadn't deleted the orignals files yet.
3x STAINLESS KITCHEN STRAINERS - finally, something that didn't malfunction, break, or fall to pieces after using many times.
PIZZA STONES - Same as above.
ELECTRONIC SCALES - Still working, but we use Eneloops (of course). I'm not sure if it's because of that (nicads used to have a lower voltage than carbon/alkaline batteries, is that also true for Eneloops?) - anyway, the LCD screen is so weak you need full sunlight and/or the flouro light turned on, to read it.
I think the most revealing day I had at Aldi was when another customer brought something back as I was going through their projectile-launching checkouts. Said he bought something electrical, got it home, and it didn't work. Manager shrugged, said yeah, no prob mate - happens all the time - just bring it back - about 2 out of every 5 electrical products are returned as faulty!?
NOTE: That was a few years ago. But I'm not seeing vast improvements in other areas with their products. (So I don't imagine that aspect has changed much either.)
BTW… KMart, Target, etc. are no better. The more rubbish products Australians buy, the more companies making quality ones go broke - and that's all we'll be left with.
You've got to understand the supply chain model they are using to fully appreciate how cheap they can make things.
Things to consider:
There is no ongoing supply chain to worry about (no relationship with suppliers like normal stores), they are one-off deals typically, these means they seek out the cheapest price.
They buy NOT on customer demand but on the cheapest supply option. e.g. I believe it is by ship container or looking for oversupply issues in china.
As far as I can see there is no after sales service beyond REFUND. This is critical to saving money for ALDI. I have explored this now in detail and in terms of special buys ALDI works like a popup shop works.
Something goes wrong and you want it REPAIRED or even replaced beyond the time the deal is on and your out of luck. You will note by looking at your special buy warranty flyers they use various third party email addresses for repairs and these email address can do out of date very fast. Typically no parts are in stock for big items (e.g. things like their outdoor furniture is a good example, unless they happen to have been in the ship container that came over or are from returned faulty stock. You usually end up get a refund or finding clearance stock.
As I understand the marketing model this saves ALDI heaps of money because there is no need to operate a professional after sales function. Even the ALDI after sales lines are operated by shared services companies. I've even had them quote the wrong company then correct themselves on the phone.
This isn't necessarily a bad model, we as a consumer can often get good things at a good price and ALDI makes decent money but anything that you might want "repaired" if it fails or anything you might want again are out of the question when shopping at ALDI. Examples of no go items would be LED globes for sets (e.g. a globe dies and you have to throw the set as aldi may never have them again and no one else stocks the same model) Matching furniture, built in equipment (e.g. say tv mounts or video doorbells) Anything like this you can't just throw out without substitution.
I'd like to see ALDI run a more repeatable business with their special buys as they have had some good deals but I always have to remember that when something from ALDI fails within warranty all I can get is my money back.
Now, one or two might point out that ALDI does sometimes REPEAT a deal, therefore invalidating my point. Well thats not really the case. The repeat is usually another deal. e.g. take the Auto XS Smart Car/Bike Chargers.
First models were $30 with 1 year warranty by a company called AWA or something. The "repeat" deal looked identical, same price, plus a 3 year warranty but it wasn't done with AWA and the internal components as best I can figure are inferior! to the model that initially came out despite the warranty. So again.. one off deals is how they do the prices.
cheers… good topic!
p.s. not every special buy is cheap, I've got lots of "special buy" equivalents elsewhere, so careful not to be fooled.
Getting refund is the best thing about aldi
Many other stores are very difficult to get a refund.
better ones are costco and officeworks in terms of refunds. Aldi is limited to 60 days where as I think officeworks is about 1 year and costco is as long as your a member. that said, not everyone wants a refund. Sometimes you just want it fixed. ;) Point taken though.. can't imagine shoppping express offering a refund or those kind of traders on this forum.
Problem with costco is the yearly membership fee and lack of stores
also costco is not much good for most people unless they love buying large bulk items.
I doubt officeworks gives u refund for 1 year, unless there is something wrong with it.
Else for returns it is 7 days.
Aldi - you can get a refund past 60 days, if the item can't be fixed by warranty.
I doubt people would want to get an item fixed over getting your money back
if you know the item is crap and will break.
So refund is always better, so u can buy something else.
Yep, true wish costco had more range too. I've returned one item to officeworks after about 13 months due to usability issues without any problems plus a few other items because they were just plan crap. e.g. some sandisk keys recently. There is a policy on the website that talks about not being happy with your purchase as being a reason for return.
http://www.officeworks.com.au/information/policies/return-po…
Might get different results per store I guess, but for me I've had luck with it.
I'd have to disagree that everyone only wants refunds all the time. I usually take some time deciding on something so its really frustrating to decide on something then be forced to return it coz it was falsely advertised or poor quality or just plan failed. Often things are part of a set (e.g. LED globes, chairs, etc) or you have to mount them on the wall (brackets, speakers etc) or you buy extra stuff to use with them (baby monitor - additinal monitors) so its just a pain in the bum if one goes wrong and they can't give a replacement or fix. Aldi doesn't always get stuff back in either (e.g. LED globes bought for a set of fittings, one fails.. aldi doesn't often have the same LED globe ever again)
Sure if none of that is relevant to the particular purchase, a refund is great. I guess just have to be "selective" of what to buy at Aldi with the refund policy in mind.
Of course they make money on the items. No point selling stuff at a loss all the time
I've got plenty of stuff from the special buys, I'm a bit selective on what I get based on the quality of it. In reality I've only taken one item back, twice - A cheap set of USB powered computer speakers that seem to get interference in the form of faint crackling sounds when the computer is doing 'the wrong thing'. Some stuff hasn't lasted very long, but I've got value for money out of it though.
You'll find that the prices are a bit more what you would pay buying from China via eBay yourself. This is for items for which there is a direct comparison, things like video cables, tablet cases. Some items are made to order so those are harder to compare. For this premium you get their 60 day return policy. They take up quite a lot of floor space so they wouldn't want to lose money selling these items. Also the bulk buy is global, which is why you sometimes find reviews in UK or German sites.
Of course if the items are remaindered then it could be even cheaper.