why is cheap olive oil and honey usually sourced from different countries?

Question

I can’t imagine sourcing from a variety of countries is cheaper than coming from one source. I also can’t imagine it’s a blended scotch situation. Here’s an example https://media.discordapp.net/attachments/707766368363216918/1288581748552110260/image0.jpg?ex=66f5b4c5&is=66f46345&hm=67504fd0cf1f4f340df2d8a68eb026e9cf55bfb9d2cd13280c92dabc7a126f0f&

In: Economics

Answer 1

why is it hard to believe that buying from multiple sources is cheaper than 1 source? If a good is limited in supply in country A, I need to also source from country B.

Sure, country A is cheaper, and if they could fulfill my entire demand that would be great, but maybe they can’t. They’d raise their prices because that’s how supply and demand works.

So, the average of country A’s lower price and Country B’s prices is lower than buying it all from Country A.

In fact, the competition could incentivize both of them to essentially work in my favor, whereas neither has any incentive if there’s an exclusive deal between myself and them.

Not the exact same concept, but I managed supply chain costs for labor providers. It never was cheaper to only have 1 supplier. for similar reasons, 1 supplier usually can’t meet all of your demands and because it creates natural competition amongst everyone you buy from when they are pitted against one another for your business.

You would see some short term cost advantages to going with a single source, but without fail……all of the more expensive suppliers magically found a way to cost less when they weren’t getting any of your business.