"Why is your store so expensive?" - An inside look at the costs of exotic snacks.
When trying to figure out how to start off this whole "Blog Posts" thing, I cycled through a lot of different ideas. I decided to open up with one of the most frequently asked questions, because I guess our FAQ page wasn't good enough for some people, "Why are your products so expensive?"
There are quite a few things to consider:
I will touch on each of these topics briefly, and if there are any other questions brought up please reach out to us !
The average case of soda (24 bottles) weighs anywhere from 28-42 pounds. Taking weight alone into account, this can lead to a very high shipping price. Now lets consider that nine times out of ten we have to send this weight not only across the US, but across entire oceans, which brings us to our next point.
From where I sit writing this post, the town in Thailand where we source all of our Thai snacks and drinks is about 8,400 miles away. On average, my personal car gets about 21MPG. I use premium gas, but for arguments sake lets just say I was filling up on regular unleaded. It would cost me roughly $1,076 to drive that distance at today's gas price of $2.69 per gallon. That is just fuel costs.
Now take into account that they load these packages into planes, which have a much much higher fuel costs. Shipping providers also take into account dimensional size of the package, labor for employees involved in transport, as well as many other logistical factors that I honestly don't even understand myself.
Some products we stock in our store are extremely limited. Whether the bottle neck is in the country it originates from, or in the ability of our team to secure the product, some items are only able to be secured in extremely small quantities.
For example, the Fanta Kola Inglesa from Peru only ever comes around in one or two 12 packs. The Mitsuya Lemola is extremely limited not only in the US, but in Japan where it originates from as well.
Limited availability drives up costs on our end, and unfortunately on the retail end as well. An good example of this in real life is the fact that the smaller the package tends to be, the more it costs to ship per item within said package. Shipping 24 bottles of soda adds less to the overall cost per soda than shipping just 12 bottles.
Between the months of August (When we began setting up our storefront) and December 2019 we incurred approximately $107 thousand (no exaggeration) of overhead costs. In a perfect world we would have made that much to cover it, but like any business, it's an investment. We are still working towards the "green" everyday, while also needing to invest into more product, and pay our personal bills as well. Starting a business is not easy, and unfortunately it is nowhere near cheap either with tons and tons of minute hidden costs that quickly add up. Consider credit card processing, POS/Website fees, and the electricity needed to run our coolers 24 hours of the day.
Touching back on the soda transportation, labor is a major factor involved in our retail pricing. Everyone in the process takes a portion of the end costs;
- Post Carriers.
- Our suppliers overseas.
- Soda manufacturers.
- Shop keepers (Us).
The manufacturers of the beverages set the initial costs at retail or wholesale price points. Our suppliers buy the soda and tack on their fee (they have bills to pay too). Then the shipping carrier tacks on their fees so they can run a profitable business as well. That lands it in our hands, leaving us to price it appropriately so that we can pocket a couple dollars not only to try and expand Desert Drinks and Exotics, but unfortunately we have personal bills to pay as well.
I would also like to mention the fact that we sometimes spend upwards for 90 hours in the shop a week. At minimum wage that would net us around $1,080 a week before taxes, and we are lucky to be able to net that much ourselves a month sometimes.
This part somewhat ties into to the labor part as far as tracking the money and seeing where it all adds up. Taxes is one of the most frustrating things to me as a small business owner. Not only do we pay taxes on the money we bring in, but we have to pay taxes on the items we bring in. This comes in the form of customs fees most times, sometimes being as high as $250 on a single case of soda. That alone is more than $10 per soda in additional costs.
To sum it up...
There are a lot of factors to think about before looking at a $15 price tag on a bottle of soda and immediately assuming the shop keeper is trying to rip you off or get rich, and unfortunately we deal with accusations such as this far more often than we should. Desert Drinks and Exotics works hard every day to bring the best pricing on exotic snacks and drinks to our customers, and taking some time to compare our pricing and customer service to the competition can hopefully bring light to that fact.