Articles

Archive List

ARTICLE ARCHIVE LIST

 

What is Drop Shipping?

Sell what Sells, NOT what's Cool

The Wholesale Misconception

Don't Get Taken by a Fake Suppli...

Wolves in Wholesale Suppliers' C...

Working Within the Process

Is Santa's Sleigh Big Enough for...

Beware of Drop Shipping 'Agents'...

Direct From The Factory?

4 Strategies for Seasonal Sellin...

3 Tools for Product Sourcing on ...

Tradeshows the Right Way - How t...

Tradeshow Sourcing - When the Sh...

Preparing for the Holiday Season...

What a Wholesale Supplier Expect...

Product Sourcing Using Trade Pub...

Tips for Finding and Getting Goo...

Storage Units Auctions - Buying ...

Starting an Antiques and Collect...

How EBay PowerSellers Source Pro...

How to Build Your Online Consign...

Dangerous Mindsets - Changing th...

Sourcing Customer Returns - Buyi...

Product Sourcing Strategies - Ne...

6 Common Product Sourcing Questi...

Increasing Your Profits through ...

Importing Basics - What You Need...

Selecting and Changing Your Prod...

The Inside Scoop on Trade Shows ...

How to Make Product Liquidation ...

Shopping with Uncle Sam - A Brea...

One Man's Trash... Could Be Your...

Our Town - Sourcing Products Loc...

An Intro to Closeouts - A Produc...

How to Find Authentic Suppliers ...

Beyond Borders - Sourcing Overse...

Heads or Tails? - How to Find Yo...

Five Holiday Trends - What Every...

Seeing the Whole Picture - A Who...

Drop Shipping Pros and Cons - th...

Far From Home - 4 Keys to Succes...

Product Sourcing Strategies for ...

The Ins and Outs of Importing - ...

How to Choose Your Product Lineu...

The Fine Art of Product Sourcing...

Sourcing The Secondary Market - ...

Local Sourcing Techniques - Prod...

Global Sourcing - Importing for ...

A Foreign Affair - Preparing to ...

Choose Wisely - How to a Pick Pr...

Made in China - Importing Option...

The Color of Money - How Color T...

The Nuts and Bolts of Liquidatio...

How to Break Into Importing - An...

Trend or Fad? What to Ask Before...

What Your Country Can Do for You...

Opportunities Abroad - China Sou...

Trade Shows Year-Round - What Pe...

5 Product Trends for 2008 that E...

Successfully Negotiating with Yo...

5 Strategies for Safely Sourcing...

Informed Compliance for e-Tailer...

Locate Qualified Drop Shippers f...

What is Product Sourcing? The So...

Where Do I Find Products to Sell...

Tips for Finding and Working wit...

A Beginner's Guide to Buying Dir...



buying groups - Increasing Your Profits through Buying Groups - Strength in Numbers

by Chris Malta

Why Join a Buying Group?
Because wholesalers give pricing breaks to customers who buy in greater volumes, small businesses are at a disadvantage. They can't afford to purchase in huge quantities like the larger retail chains. Many small retailers are turning to buying groups to level the playing field and allow them to compete with bigger vendors.

Attorney Harry B. Ray,founder of BuyingGroups.com, explains, "A buying group is a group of businesses in the same industry who combine their purchasing power to negotiate better prices and terms from the vendors." Buying groups can potentially do a lot for your small business:

    • Because you're buying in larger quantities, you get pricing breaks that enable you to be more competitive.

    • With the combined buying power of your group, you can meet enormous purchase minimums that you could never afford on your own.

    • You get better payment and freight terms. With certain-sized orders, wholesalers will even waive the freight altogether.
How Do Buying Groups Work?
There are different models that these groups may follow, but two are the most common:

    The Democratic Model
    Everyone owns an equal share in this type of group. Ray assert, "This is a good model for a new group because you get instant loyalty from the members if they feel like they own the group. They'll more likely contribute their time and effort to make the group successful, and certainly be more willing to put money into the group to make it work."

    In this model, everyone has a say in everything - vendor selection, product selection, group policy, etc. The manufacturer rebates are divided equally among the members.

    The Benevolent Dictatorship Model
    One person, or a few people, start the group and own it. An advantage of this model is that it allows decisions to be made quickly.

    The other members are like subscribers - they get the advantages of belonging to the group, but have no say in the way things are run. The owners can also keep the rebates for themselves, or keep back a percentage and pass the rest on to the group.
What's The Financial Structure?
Buying groups often use their manufacturer rebates to pay their operating expenses, and divide the remainder among themselves. Since the rebates are found money - money the members wouldn't have anyway - no one minds using them to cover business overhead.

They also charge a fee to join and participate in their benefits, as well as membership dues.

Most buying groups just break even on their investment - their purpose is saving money, not making it. Whether or not you expect to make money is one of the primary factors in deciding how to structure your group. A C-Corp and an LLC (limited liability company) are the most common legal structures for these groups, and generally the most practical. If you're starting a new group, make sure you talk with your attorney about which one's right for you.

 
Archive List

ARTICLE ARCHIVE LIST

 

What is Drop Shipping?

Sell what Sells, NOT what's Cool

The Wholesale Misconception

Don't Get Taken by a Fake Suppli...

Wolves in Wholesale Suppliers' C...

Working Within the Process

Is Santa's Sleigh Big Enough for...

Beware of Drop Shipping 'Agents'...

Direct From The Factory?

4 Strategies for Seasonal Sellin...

3 Tools for Product Sourcing on ...

Tradeshows the Right Way - How t...

Tradeshow Sourcing - When the Sh...

Preparing for the Holiday Season...

What a Wholesale Supplier Expect...

Product Sourcing Using Trade Pub...

Tips for Finding and Getting Goo...

Storage Units Auctions - Buying ...

Starting an Antiques and Collect...

How EBay PowerSellers Source Pro...

How to Build Your Online Consign...

Dangerous Mindsets - Changing th...

Sourcing Customer Returns - Buyi...

Product Sourcing Strategies - Ne...

6 Common Product Sourcing Questi...

Increasing Your Profits through ...

Importing Basics - What You Need...

Selecting and Changing Your Prod...

The Inside Scoop on Trade Shows ...

How to Make Product Liquidation ...

Shopping with Uncle Sam - A Brea...

One Man's Trash... Could Be Your...

Our Town - Sourcing Products Loc...

An Intro to Closeouts - A Produc...

How to Find Authentic Suppliers ...

Beyond Borders - Sourcing Overse...

Heads or Tails? - How to Find Yo...

Five Holiday Trends - What Every...

Seeing the Whole Picture - A Who...

Drop Shipping Pros and Cons - th...

Far From Home - 4 Keys to Succes...

Product Sourcing Strategies for ...

The Ins and Outs of Importing - ...

How to Choose Your Product Lineu...

The Fine Art of Product Sourcing...

Sourcing The Secondary Market - ...

Local Sourcing Techniques - Prod...

Global Sourcing - Importing for ...

A Foreign Affair - Preparing to ...

Choose Wisely - How to a Pick Pr...

Made in China - Importing Option...

The Color of Money - How Color T...

The Nuts and Bolts of Liquidatio...

How to Break Into Importing - An...

Trend or Fad? What to Ask Before...

What Your Country Can Do for You...

Opportunities Abroad - China Sou...

Trade Shows Year-Round - What Pe...

5 Product Trends for 2008 that E...

Successfully Negotiating with Yo...

5 Strategies for Safely Sourcing...

Informed Compliance for e-Tailer...

Locate Qualified Drop Shippers f...

What is Product Sourcing? The So...

Where Do I Find Products to Sell...

Tips for Finding and Working wit...

A Beginner's Guide to Buying Dir...