How Does a Purchasing Co-Op Work?

As children, many people remember teachers and parents encouraging them to work together to achieve a goal or accomplish tasks. A purchasing co-op allows businesses to continue working together in order to gain more purchasing power and save money.

What is a Purchasing Co-Op? 

A purchasing co-op is an arrangement among small businesses to work together in order to get lower prices from selected suppliers. Government agencies have used co-op purchasing for many years, and the process is a growing method for small businesses to get lower prices for goods and services. In simple terms, a small business co-op allows two or more companies to purchase under the same contract, often providing those companies with cost savings.

Benefits of Co-Ops 

Purchasing co-ops for small business provide many benefits. When small business owners work together, they find they become a larger institution, allowing them to negotiate discount bulk process for almost any product or service they need, including supplies, inventory and health insurance. In addition, members can exchange advertising ideas, standard operating procedures and educational information.

Cost Savings

Because a purchasing co-op allows members to work together to purchase goods and services, there can be significant cost savings for those who become members. By pooling the buying power of many different businesses, a purchasing co-op allows members to negotiate prices as low as large businesses even though they are significantly smaller. For example, a local grocery store could negotiate advertising costs at the same rate as a national chain, such as Giant or Kroger.

Joining a purchasing co-op is one of the best ways for a small business to gain purchasing power, develop additional networking opportunities and save money. A co-op helps small businesses become more competitive and profitable while remaining independent. They provide a way for like-minded business owners to gain access to products and services they either would not have been able to access or simply could not fit into the budget due to the costs. By teaming with other business owners, co-op members are able to save money by purchasing items at bulk prices through the network they develop within the co-op.

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