Setting Price, Intermediaries and Newfoundland

We as Newfoundlanders often complain about the price to buy things such as clothes, groceries and some of our health care products. I admit that I complain as well, everybody wants to save a buck. However it is a small price that we pay for living in the wonderful place in which we live.

Most all of the products we buy in Newfoundland are shipped to the island by either boat or plane. I will point out that we do have some products made here. For example Purity Factories in St. John’s produces a line of biscuits, candies and syrups.  However a high percentage of what we buy has not been produced here and have to be shipped in. To do this we quite often have to use intermediaries. An intermediary is an organization that the product flows through on its way to the consumer. What an intermediary is does is help to keep a continuous flow of the product from the manufacturer to the consumer through logistics. Logistics is the buying, selling, storing and transporting of the product. With each time that the product passes from the manufacturer to a new intermediary, wholesaler, distributor and retailer the price is edged up just slightly. How this works is that each time the product passes it is bought by the intermediary. Each intermediary is in it to make money and therefore a small mark up is placed on the product to get some sort of profit.

 

Since we live on an island we have the extend cost of shipping to the island in our price. Essentially meaning one of two things; one the intermediary has an additional cost to get the product here or we have to add an extra intermediary to do the same. This is why the cost of living in Newfoundland is sometimes considered to be so high. So the next time that you look at a price and complain about it or make a note that it was a lot cheaper in another province or state remember that it is the small price you play for living in such a great province.