Group Buy prices on individual sales

[ancapgeko]

About a month ago i had an "aha" sort of moment. I realized that all of us, homebrewers that is, are buying the same things. We all buy grain, we all buy hops, we all buy yeast, but we rarely get together to take advantage of bulk purchasing discounts.
Occasionally, those that live near each other will get together for a group buy and buy in bulk.
I started asking the question: Why do we have to live near each other to take advantage of bulk discounts?
I propose the following: That we as homebrewers form a purchasing Co-op.
I've been running some preliminary numbers and they look really good. The point of this post though is to get a read on whether people would be interested.
I'm posting a poll to see the level of interest. If you have any questions please feel free to ask and I will do my best to answer.

 

[Airborneguy]

I don't see how this would work better than regional group buys which are already all over this forum. What sort of system did you "run the numbers" on?

 

[bob1852]

check out this section of the forum....

https://www.homebrewtalk.com/f174/

 

[ancapgeko]

It could potentially be quite a bit more effective given the possible member size of a co-op. This would apply to not only grains and other ingredients, but to equipment as well.
Given that a co-op is a business the co-op would also have the business account discount that is impossible with a simple group buy. The advantage to homebrewers in forming a co-op would be that the co-op business has a different focus than other businesses (instead of the profit motive, they are motivated to save money to the members).
I ran the numbers on an Excel spreadsheet. I am an experienced entrepreneur and business manager and have been developing and generating business projections, cost/benefit analysis, and cash flow projections for the past 15 years including 2 startups. I started this thread to get an idea on whether people might be interested, because the viability of a co-op increases dramatically with the initial membership size.

 

[Airborneguy]

But the problem is in the shipping. Bulk buys not only take advantage of bulk pricing, but also bulk shipping. I can get a bag of Maris Otter in a bulk buy for $32 with $5 shipping. I don't see how a co-op, with members spread throughout the country, would overcome the shipping burden. If you did, how would that be cheaper than the bulk buy concept we already use?

I'm not being facetious, just skeptical. I vote with my wallet. If you had a cheaper system, I would use it.

 

[ancapgeko]

check out this section of the forum....

https://www.homebrewtalk.com/f174/

I realize that there are group buys and that they are effective in their purpose. I'm not trying to reinvent the wheel. I'm trying to expand the wheel. Not all of us want to buy grain by the 50lb sack, but all of us would like to get grain cheaper. I believe that a homebrewers purchasing co-operative can accomplish this.

 

[ancapgeko]

But the problem is in the shipping. Bulk buys not only take advantage of bulk pricing, but also bulk shipping. I can get a bag of Maris Otter in a bulk buy for $32 with $5 shipping. I don't see how a co-op, with members spread throughout the country, would overcome the shipping burden. If you did, how would that be cheaper than the bulk buy concept we already use?

I'm not being facetious, just skeptical. I vote with my wallet. If you had a cheaper system, I would use it.

I'm not debating the value of a group buy, I'm trying to expand it.
Not everyone wants to buy a full bag of grains, but we would like to take advantage of a group buy with hundreds or thousands of other homebrewers like them.

Scenario: Co-op buys that same maris otter grain bag and splits it into 50 1lb bags and sells it to its members for $1.00/lb + shipping. This isn't quite as good as a group buy, but its at least $.50 cheaper than everywhere else. Also, I (as the member) don't have to buy 50lbs of grain.

The above scenario is just one option and with enough members even greater savings can be seen. A co-op wouldn't really compete with regional group buys, it would compete with the current market suppliers.

 

[Hugh_Jass]

It sound like your idea is against the rules of this forum.

Group Buy Rules

Only ingredient group buys are allowed on HBT unless you are an HBT registered Vendor.

Exact price from retailer must be posted in thread and cost must be exact, no up charge for putting together group buys or expense fee of any sort.

Pickup of ingredients from group buy must be local, no shipping to people participating allowed.

Retailer of ingredients is not allowed to be active in thread unless they are an HBT Vendor.

Group buy must be organically started by a well established HBT member. Anyone working for or affiliated with the retailer will not be allowed. Attempting to do commercial/vendor/profit sales fronting as a Group Buy will result in banning and having company blacklisted from HBT.

HBT is in no way responsible for Group Buys and cannot help or assist in a dispute. Buyer beware!

The retailers on this site pay a premium to sell their wares. We mustn't whittle away at their profit margin.

 

[ancapgeko]

It sound like your idea is against the rules of this forum.



The retailers on this site pay a premium to sell their wares. We mustn't whittle away at their profit margin.

I'm not sure how this idea is against the rules. I'm not part of any retailer trying to organize a "false" group buy. I'm not trying to organize a group buy of any sort.
I am trying to see if the idea of a member owned company/cooperative would have any kind of support.

 

[jbrookeiv]

I'm not sure how this idea is against the rules. I'm not part of any retailer trying to organize a "false" group buy. I'm not trying to organize a group buy of any sort.
I am trying to see if the idea of a member owned company/cooperative would have any kind of support.

Honestly, you're probably better off starting an online store, buying in very large quantities and selling at a smaller cost to the consumer. The logistics of what you're talking about would be a nightmare.

 

[ancapgeko]

By the nature of the responses it looks like I have not explained myself appropriately. I will attempt to paint a clearer picture.
First, in case people are unfamiliar with the Co-op business model: a co-op is a business formed by like minded people for the express purpose of taking advantage of bulk discounts on goods and/or services. The Co-op is funded through an initial member fee and by charging enough on the sales of the goods to remain fiscally sound. A co-op is not designed to make a profit, and in most states are legislated against making more profit than a certain percentage. Furthermore, any profit the co-op does make is returned to the members based on their usage of the services.

My thought was to set up an on-line co-op of homebrewers. The logistics would not be any different (day to day) than any other on-line business.

I understand that the current homebrew shops are trying to make money. I respect it. I'm a business man myself. I just see a way to create a savings in a hobby that I enjoy. I started this post to see if there would be any interest in any other people here. If there isnt, then there isn't. If there is then maybe we have something.

 

[Hugh_Jass]

I'm not sure how this idea is against the rules. I'm not part of any retailer trying to organize a "false" group buy. I'm not trying to organize a group buy of any sort.
I am trying to see if the idea of a member owned company/cooperative would have any kind of support.

A co-op is essentially a group buy writ large. You're using collective buying power of many consumers to collectively secure a lower price.

I'm all for the idea and would probably participate.

it would be interesting for Tx to chime in whether he'd allow it or not. It's his sandbox

 

[1234]

I would be more than happy to assist with this. I was thinking that we could just simply organize our group buys to maximize our savings. If we had a co-op we could buy from Brewers Supply Group, who only sells to breweries and homebrew stores. I think that we could buy grain and other supplies and have it shipped to all around the country.