In short: UNIQLO is cheap because it procures its fabric from material manufacturing partners at low costs by ordering large volumes. Additionally, UNIQLO outsources its production to partner factories in emerging countries for its low-cost production, unlike other brands.
When it comes to buying good, affordable basics, there’s really no better place than UNIQLO. You can get a crisp tee shirt for less than $10, or a pair of sweatpants for under $15.
Here are 4 reasons why UNIQLO is so cheap and affordable:
1. Procurement of materials at low cost due to the large volume
A big reason why UNIQLO is so cheap is that it continuously seeks to combine the highest quality with the lowest-cost material by directly negotiating with manufacturers.
According to a Harvard MBA student, UNIQLO can secure stable, high-quality materials at low cost by ordering large volumes and procuring its fabric from its material manufacturing partners.
Since the UNIQLO directly negotiates with manufacturers, does not own any factories, and is tied down to any specific one for a long period of time, it can sell products at a cheap price.
However, affordable does not mean low quality.
It is easy to categorize UNIQLO in the same group as H&M and Zara, but UNIQLO, in addition to being affordable, also focuses on being high-quality. UNIQLO products are simply durable.
2. Outsourcing production to emerging countries
Unlike other fast fashion brands, UNIQLO outsources its production to partner factories in several emerging countries for its low-cost production. This drives their prices down.
In fact, UNIQLO doesn’t own factories and holds the flexibility to change production partners because it understands that the best production location will change as time goes by.
Currently, UNIQLO has relationships with factories in Bangladesh, China, Indonesia, Vietnam, and Turkey. This is another reason why they purposely keep their prices so low.
Unlike most fashion brands that are tied to one location, it seems like UNIQLO’s ability to easily change manufacturers is another key reason why their products are so inexpensive.
3. Cut out the middleman and control the process from start to finish
If you go shopping for a sweater, you’ll notice that it’s nearly impossible to get a 100% cashmere sweater for less than $100 – except at UNIQLO. So how do they keep their prices so low?
In an interview with The Cut, Yuki Katsuta (head of research and development) claims that there’s really almost no difference between a $100 cashmere sweater and a $1,000 one.
Almost all cashmere is made from the same batch of Mongolian goats. UNIQLO has its own farms for sourcing yarn, but they’re no different from the farms used by “fancy brands”.
Katsuta says UNIQLO is able to keep its prices low because they cut out the middleman and control the process from start to finish. After all, everybody buys from the same place.
4. Collaboration with important manufacturers
Last but not least, UNIQLO is able to sell its products at a cheap price by building strategic partnerships with Japanese high-quality and innovative manufacturers.
HEATTECH, for example, was developed with Toray, a Japanese synthetic fiber manufacturer. It is thin, comfortable clothing that retains body heat, and is key to UNIQLO’s success.
Another example is procuring specific spinning and dying denim from the Kaihara corporation, a Japanese denim fabric manufacturer. You can see why it has the ability to reduce its prices.
Now you know why UNIQLO is so cheap and affordable. As a fashion brand, UNIQLO has a well-thought-out business model for keeping costs low while making high-quality clothes.
UNIQLO’s ability to order high-volume amounts, change manufacturers, and the goal to cater to various demographics are key reasons why its products are so inexpensive.