What costs could be reduced through bulk/shared buying?

[JamesR45]

Hi all,

I wondered if I could pick your brains...

I'm interested to know what costs/purchases your business incurs on a regular basis that you think could be cheaper if your business made those purchases as part of a group of businesses (and so gained a bulk discount). I ask because I'm in the process of building up a community of businesses in the legal sector and I'm considering offering them a membership service for gaining certain common products/services at better prices. I'm now wondering what commonly purchased products/services might suit this type of buying best, so any thoughts welcome!

thanks!

 

[Mr D]

Pretty much anything.

Stock. Consumables. Assets.

Depends whether the cost of the service is greater than the benefit. Not all buying groups work out for all potential members.

 

[JamesR45]

Thanks Mr D.

It's actually quite hard to narrow down - trying to find products/services that are regularly bought (to cover the monthly subscription), but are also bought by most of the target audience, and also (ideally) sourced at a national level, not just available locally.

The higher the value of the purchase the better, to help cover the membership cost (which wouldn't be huge, in the tens of pounds per month).

 

[Mr D]

Thanks Mr D.

It's actually quite hard to narrow down - trying to find products/services that are regularly bought (to cover the monthly subscription), but are also bought by most of the target audience, and also (ideally) sourced at a national level, not just available locally.

The higher the value of the purchase the better, to help cover the membership cost (which wouldn't be huge, in the tens of pounds per month).

So a few hundred a year cost. Benefit would have to be at least that much - possibly a lot more - to be cost effective for the members. However those supplying goods / service won't necessarily be getting that much extra business - rather than existing business instead done through the discount service so won't want to give big discounts.

Perhaps examine your target market - what do they spend thousands / tens of thousands a year on?

 

[JamesR45]

Thanks Mr D, I think you're hitting lots of nails on heads there. I'm struggling to pinpoint those items of spend, but will keep thinking.

 

[Mr D]

Thanks Mr D, I think you're hitting lots of nails on heads there. I'm struggling to pinpoint those items of spend, but will keep thinking.

You mentioned legal.

Perhaps stationery, software, furniture, IT, mobile phones even?

 

[ComPropSolicitor]

would have thought legal was one of the worst markets for this idea tbh

but, the obvious one is paper

 

[Paulo1Chop]

Are you limiting it to actual goods then or including services too?

 

[JamesR45]

would have thought legal was one of the worst markets for this idea tbh

but, the obvious one is paper

I agree, I initially thought about paper, but wasn't sure if enough was spent on it per month/year - how much paper would a firm use per month, I guess not hundreds of pounds worth (other than for the larger firms)?

 

[JamesR45]

Are you limiting it to actual goods then or including services too?

Yes, definitely services too. Basically anything that is a) commonly and regularly purchased and b) at a reasonably high cost across a whole year - in order to justify paying a membership fee to gain access to the discount.

 

[Paulo1Chop]

Not a great move to promote how much paper you're using either what with the move to 'green/sustainability' type stuff going down....(or not!)

 

[Paulo1Chop]

When I used to work in the "corporate world" we had a 3 person team come to collect our scrap paper a few times a week! 3 people just to collect maybe 3 or 4 bags of paper that had already gone through the security shredder! Crazy, but obviously a successful enterprise!

 

[alan1302]

Not a great move to promote how much paper you're using either what with the move to 'green/sustainability' type stuff going down....(or not!)

Paper seems to be a pretty green and sustainable product though.

 

[Paulo1Chop]

Paper seems to be a pretty green and sustainable product though.

what I meant was that there is more of an effort to use less and making a conscious effort to 'bulk buy more' (for less) isn't a good look!

 

[Mr D]

When I used to work in the "corporate world" we had a 3 person team come to collect our scrap paper a few times a week! 3 people just to collect maybe 3 or 4 bags of paper that had already gone through the security shredder! Crazy, but obviously a successful enterprise!

May depend on what is being done.
Worked for a while in an office where legal documents would be sent to as many as 9 parties in a claim. With redacted pages that were not necessarily the same for each party so copy had to be held in our office of what was sent.
Couple of pallets of paper a week at least.

 

[Paulo1Chop]

There's definitely industries where going paperless may be a little bit out of the question before a major shift in behaviour - perhaps no better example that the legal profession as you say, Mr D!

 

[JamesR45]

I think the need for paper of some kind will be around for some time in the legal sector... it's just not possible to share rafts of information across people (e.g. esp. in court) by any other means.

Also, if the profession moved to adopting recycled paper (and then also recycling it) I'd be just as happy to negotiate recycled paper at a discount instead.

I did once gain a very rough estimate from a lawyer of an 'average' firm usage being based on a ream (500 sheets) per fee earner per month. Though that's not really very much spend when a ream might be about £6. I'll need to revisit that to see if usage is actually higher than that.

 

[NickGrogan]

Surely the question should be what products do you have the skills to negotiate a better price for?

 

[Mr D]

I think the need for paper of some kind will be around for some time in the legal sector... it's just not possible to share rafts of information across people (e.g. esp. in court) by any other means.

Also, if the profession moved to adopting recycled paper (and then also recycling it) I'd be just as happy to negotiate recycled paper at a discount instead.

I did once gain a very rough estimate from a lawyer of an 'average' firm usage being based on a ream (500 sheets) per fee earner per month. Though that's not really very much spend when a ream might be about £6. I'll need to revisit that to see if usage is actually higher than that.

A ream for £6?
Need to get them shopping in supermarkets. Much cheaper.

 

[JamesR45]

A ream for £6?
Need to get them shopping in supermarkets. Much cheaper.

Ha ha, true. In my experience the sector uses decent 100gsm stuff.

 

[JamesR45]

Surely the question should be what products do you have the skills to negotiate a better price for?

I agree in that some purchases (fleet cars for example) I'd avoid due to lack of industry knowledge, but most other common/commodity business services/products I would think are fairly straight forward(ish). My starting point is trying to see the need from the member's viewpoint, without pushing products/services onto them that might be less appealing.

 

[JamesR45]

would have thought legal was one of the worst markets for this idea tbh

but, the obvious one is paper

Was there a reason why this sector is esp bad for this idea? You're in the sector so I'd appreciate your view. To my mind, I've always seen the legal sector as being more bothered by what their peers/competitors are doing than most other sectors, so I thought firms might want to be included by the fear that other firms around them are paying less than they are for the same xyz products/services.

 

[NickGrogan]

I agree in that some purchases (fleet cars for example) I'd avoid due to lack of industry knowledge, but most other common/commodity business services/products I would think are fairly straight forward(ish). My starting point is trying to see the need from the member's viewpoint, without pushing products/services onto them that might be less appealing.

OK, sticking with paper, which paper should they be buying and why?

 

[Financial-Modeller]

Why not look at higher-value purchases? People, premises, IT and utilities.

It is likely that the savings to be derived from hiring temps, project office space, IT, energy and telecoms across a reasonably-sized law firm, will be sufficient enough to get the attention of the Partner that you need to sell to. Perhaps less so with paper and post-its.

 

[NickGrogan]

They all require some skill or knowledge to be able to help companies with, and does the OPs knowledge exceed the members?

 

[Mr D]

Ha ha, true. In my experience the sector uses decent 100gsm stuff.

Perhaps they could try 75gsm and costing under £3 usually. When purchased in single reams.

 

[JamesR45]

There is another option that for certain reasons I'd discounted, but it was to not limit the membership to any given product/service, but instead to be a more bespoke 'smarter sourcing' service - i.e. do the leg work of sourcing supplier options as and when needed - anything from leaflet printing to Christmas meal venues, to cleaners.

This would be a different take on the membership, i.e. the value to the members would be a mix of a) saving them the time/hassle of trying to find good supplier options for a needed product/service and b) them paying a fair/low price (i.e. never overpaying because we'd have done the due diligence). This service wouldn't really have a 'bulk' buying angle, and would be more labour intensive for me, but there would still be some economies of efficiency for me once I'd begun to build up a go-to supplier list for certain core products/services.

I'd just need to limit the number of supplier 'sourcings' per month per member to make it manageable.

I do have a fairly varied background in sourcing suppliers in several sectors (marketing, HR, office supplies etc) so am not a total newbie when it comes to buying.

 

[saton]

When one buyer buys a lot of goods less time is spent by the seller to administer, package and ship the goods.

 

[alan1302]

Perhaps they could try 75gsm and costing under £3 usually. When purchased in single reams.

Maybe they want something of a heavier wight...better suited to printing both sides usually.

 

[Mr D]

When one buyer buys a lot of goods less time is spent by the seller to administer, package and ship the goods.

No. Would expect them to spend more time and effort on a bigger order than a smaller order. 20 pallets take more time to pack and wrap than one pallet.

However if shipping one big order for bulk purchase as a result of multiple people banding together to buy then somewhere down the line someone does have to package and ship the goods to the individual buyer from a facility.

The places I have looked at for bulk buying had the supplier shipping to each seller as needed in majority of instances.
Only one shipped to a central point to redistribute.