In today’s economic climate, businesses are looking for every opportunity to gain an advantage and stay ahead of their competitors. A popular strategy for businesses is to join a buying group to reap the benefits of combined buying power. You may have heard the term buying group before but how do they work? Read on to discover the purchasing power of a buying group and how you can save money.
Understanding Buying Groups
We’ve linked out to an article in the above paragraph but buying groups have emerged as a powerful way for businesses to maximise their buying potential, leverage economies of scale, and secure competitive advantages in the marketplace. The term buying group refers to a collective of individual businesses that unite to pool their purchasing volume and negotiation leverage, with the goal to enhance the purchasing power of its members. This helps them secure better terms, prices, and conditions when procuring goods or services from suppliers.
Buying Group Industries
Buying groups work across all industries, including:
Hospitality
Agriculture
Automotive
Construction
Healthcare
Retail
Information Technology
At Associated Independent Stores, we’re the UK’s leading buying group for fashion, home and leisure.
Does it Cost to Become a Member of a Buying Group?
The terms of being part of a buying group will vary for each business but generally speaking there are two favoured options in terms of the membership ‘cost’. Some buying groups will charge a membership fee, which can be paid per month or annually whereas other groups will require members to pay a percentage of purchases as commission. Other buying groups will offer a free membership, providing the member meets a minimum purchasing volume.
Increased Negotiation Power of a Buying Group
One of the main benefits of being part of a buying group is the increased negotiation power from all the members. Simply put if you have a several members that want to purchase a total of 10,000 units from a supplier, the ability to negotiate the price, terms and delivery for these items is dramatically improved. Also, if one of your members is looking to purchase a smaller order from the same supplier, the fact you have the other large order will help you negotiate a better deal for the small order also. If however, you was an independent store placing individual orders, the volumes would be much smaller which would result in a higher unit cost.
Additional Buying Group Benefits
With increased negotiation power, there are many benefits of joining a buying group. Below you can find a detailed list of benefits.
Competitive Pricing
Buying groups can negotiate lower prices on products and services from suppliers. This can save businesses a significant amount of money on their purchases and increase the overall profitability.
Wider Range of Products
Buying groups can often access products and services that are not available to individual businesses. This can help businesses to expand their offerings and reach new customers. This can also help businesses offer products their competitors can’t.
Improved Efficiency
Buying groups can help businesses to improve their efficiency by sharing best practices and streamlining processes. The ability to tap into the brains of industry experts can help predict trends and stay ahead of you competitors. Buying groups can take care of many of the tasks involved in procurement, such as negotiating contracts, sourcing products, and managing stock. This can free up businesses to focus on their core activities.
UK’s Leading Buying Group in Fashion, Home & Leisure
So you’ve heard about all the benefits of joining a buying group and how their purchasing power helps negotiate better deals and improve your profitability – why wait any longer? Apply to become a member or supplier today to unlock the full potential of your business. For additional information, please contact us either through completing out online contact form, calling 0121 711 2200 or emailing info@aistores.co.uk.
