The Benefits of Buying Groups (CO-OPS)
Do you work with a buying group for the best terms and discounts? Maybe you choose a co-op for networking opportunities. Either way the benefits to belongs to a Co-op are numerous.
THERE ARE NUMEROUS BENEFITS THAT INDEPENDENTS DERIVE FROM BELONGING TO A BUYING GROUP
In general terms, these benefits can be categorized into financial benefits that go straight to the bottom line, and non-financial benefits that are harder to quantify but they provide real value to the members. Some of the benefits of membership are listed below:
Financial Benefits
- Improved net pricing. The combined purchase volume of the Buying Group guarantees improved net prices paid. These savings will be passed on to the Member through a combination of lower invoice pricing, quarterly rebates, annual rebates and performance related rebates.
- Improved / extended terms. The Buying Group often negotiates more favorable payment terms including higher prompt pay discounts and longer standard terms.
- Unique product offering. The Buying Group, through its combined purchasing volume, is able to make available to its Members products that otherwise would not be available. Container Buys off-shore and unique sourcing organized by the Buying Group allows the Independent to offer something unique and protect their margins.
- More efficient invoice and payment processing. Centralized Billing through the Buying Group means that most of your purchases will be paid for by a single payment to the Group who will look after paying all of your individual Suppliers. Electronic web presentation of all your invoices and statements streamlines your paperwork even further. These efficiencies will translate into a real cost savings in your accounting office or a redeployment of manpower to other areas of your business that can provide a higher return.
- Improved Co-op Advertising Programs. Suppliers are keen to support Group initiatives to promote their products and are willing to fund much of this activity. This translates into Suppliers assisting with Co-op Dollars, Flyer production and distribution costs and other “POP” (Point of Purchase) Marketing Materials that a single Independent would never see.
- Central Billing. The centralized billing through the Buying Group also ensures you receive any credit entitlements immediately, and not applied against some future purchases. Less time spent, fewer mistakes and quicker refunds go directly to financial benefits.
- Professional Marketing/Training Programs to Generate Sales. Buying Groups do not only focus on reducing costs of materials purchased and creating savings through efficient operating procedures; they also focus on increasing their Members’ sales through Professional Marketing/Training Programs. Ultimately, the Members of the Buying Group will decide the appropriate amount of Marketing that they require.
- Group or Pool Buys. Pool buying reduces investment and increases frequency of replenishment. Many Buying Groups find it financially beneficial to all participants in the supply chain to have regularly scheduled “Event” buys, where Members’ orders are aggregated first before sending the order to the Suppliers to be filled. This process reduces costs for all parties, yet delivers a dependable consistent replenishment for many product lines.
Non-Financial Benefits
- Forum of like-minded Independent business owners to share ideas and discuss solutions to common problems. Buying Groups regularly bring their Members together for various special events, meetings and trade shows. These functions provide industry specific information that assists the Independent in running their business. However, this industry specific information’s value is often dwarfed by the value of the exchange of ideas surrounding common problems faced by the Members that occurs informally at these functions.The Independent without a Buying Group often must often make major decisions about his/her business alone because few of his/her personal acquaintances understand what he or she is facing. It is hard to put a monetary value on being able to pick up the phone and talk to someone who understands your business issues, and has a vested interested in helping you succeed as a Member of their Buying Group.
- Generation of a pool of potential purchasers if you decide to sell your business. For many Independents, the prospect of selling their business for what it is worth is very slim. Buying Groups can not only provide the required assistance to help in this process, they have a vested interest to ensure that the new business owner continues to be an active supporter of the Buying Group. Many times, it is another Member from the Buying Group that ends up purchasing the business and the Buying Group can help facilitate this process.
- Annual meetings with the Supplier’s senior executives. Suppliers want the companies that use their products to be successful at doing so. Most want to know what they can do so those same companies can use even more of their products. Buying Group events held specifically to foster dialogue between Preferred Suppliers and the Members can accomplish this. Both Members and Suppliers benefit from the sharing of knowledge that can help improve both of their top and bottom lines. Senior Executives from the Preferred Suppliers can afford to take the time to meet with Members at a Buying Group function, but rarely could they afford the time to call on each one separately.
- Affinity programs that generate real benefits. Many businesses belong to Associations like the Chamber of Commerce or an Industry Association that offers Affinity programs to help with the cost of some expense items like telephone and group insurance. The nature of these programs is that most of the financial benefit accrues to the Association not to the Independent business. A Buying Group sponsored Affinity program has all the financial benefits accruing to the Members through the Buying Group. In addition, the Buying Group is a specialist in negotiating the best deal possible for their Members.
- Centralized negotiating for major product categories improves results and frees the Independents’ time to focus on the areas that will increase performance in their business. The task for an Independent of determining which Suppliers of key product lines are the best from an overall value proposition is daunting. With limited information and hundreds of potential Suppliers to evaluate, the decision making process can consume weeks of valuable time and often results in less than ideal outcomes. A Buying Group is able to survey all of their Members with regards to the experiences of dealing with a Supplier, have presentations from all key Suppliers vying for the Buying Group’s business, have a committee of “category expert” Members assist in the evaluation process, all lead by a Professional Manager who is an expert in negotiating to insure the process results in the best decision being made. Members can focus more time on growing their business, knowing that the products they use are coming from the Suppliers that provide them with the best overall value.
- Life time friends. The life of an Independent business owner or manager can be a lonely one. Few neighbors and acquaintances understand or appreciate the time, commitment and resources required to make your business successful. In a Buying Group, everyone gets it! In many Buying Groups, the Members become like a fraternity or even a family; caring and supporting in times of need, fun loving and great to spend time with on a personal level. Often annual events are structured to encourage family participation.
Article republished from https://www.buyinggroupservices.com/benefits-of-belonging
LCN is currently working with Master Nursery Garden Centers, True Value, LANCO, Midwest Landscape Network, United Garden Center and new for 2019 Prince Corporation. Contact your Sales Rep to learn of the advantages of purchasing thru one of the buying group.
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