How Can Buying in Bulk Help Your Business? Less Isn’t Always More

When you run a business, you need more supplies than you think. Learn how buying in bulk can help you save money in the long run.

No matter how many years you’ve been in business or your average selling volume, it’s no secret that effective inventory management is one of the biggest threats to your profit margin. 

You want to ensure that you don’t run out of your bestselling items, but you’re also concerned about the high costs of producing, shipping, and storing these products. You can’t exactly cut back on the number of items you stock, however. 

So, what’s the solution? 

For many companies, it’s buying in bulk when it comes to supplies, equipment parts, the products they sell, and much more. 

You’ve certainly considered bulk buying, but you’d like to know if it’s worth the higher upfront costs. 

Read on to learn how buying in bulk can save you money and increase your profit margin. 

Buying in Bulk Is Cheaper in the Long Run

The number-one reason why so many companies opt to buy in bulk? 

Because it saves them some serious cash. On average, you can expect to save a minimum of around 20% when you buy in bulk. 

Remember that you’re not buying on a “per item” basis when you do your bulk shopping. Instead, you’re operating on a “price per unit/ounce” basis in bulk buying. 

This is an important distinction when you’re doing your savings calculations.

Because businesses are able to save on the cost of shipping and handling, they can pass those savings onto you. 

To get a better idea of the kinds of pricing you can expect when bulk buying, view here. 

More Negotiating Power with Suppliers

When you buy items in bulk, don’t be surprised to find that you have much more negotiating power with your suppliers than you might expect. 

Think about it in much the same way as a hotel offering a group rate to a wedding party. 

If they don’t offer a discounted rate for larger parties, they’ll not only lose the business, but other guests will see that those rooms are empty. This makes those staying at the half-empty hotel question how great of a place to stay it is. 

Plus, the hotel still has to pay to have those rooms cleaned and maintained, even though no one is using them. 

It’s the same thing with your bulk suppliers. 

They don’t want excess items sitting in their warehouse for months. They also want to be able to make a profit like you. Plus, they need your business for the referrals and recommendations you provide.

Never be afraid to negotiate: you’re already a valued client. 

Fewer Interruptions and Delays

More than 60% of today’s consumers say that a three-day delivery schedule should be the standard — but that faster is even better. 

If you run out of your popular items and are forced to put them on backorder, the reality is that your customers can and will go elsewhere to get what they need. 

If you don’t have the supplies you need on hand when something breaks down or if you run out, your entire production schedule will be thrown off. 

This won’t make your customers — or your employees — happy. 

Prevent these interruptions and delays by bulk buying.

Enable You to Price Goods Competitively

One of the biggest benefits of buying in bulk is that it helps you to be able to pass your savings onto your customers. 

Unfortunately, thanks to online retailers like Amazon and brick-and-mortar big-box chains, today’s customers have more options to “shop by price” than ever before. If you want to stay in business, you need to do everything you can to price your items competitively. 

Bulk shopping for your raw materials, shipping supplies, and even the tools and replacement parts you need to power your equipment will allow you to do that. 

Because you’re spending less on your products and your overall operating costs, you can afford to slightly lower your profit margin per item. Often, you’ll find that making these small pricing changes increases your profits exponentially. 

Potential Downsides of Bulk Buying

While we know you’re excited about all the advantages we’ve listed here, remember there are some times where it’s not a smart move to buy in bulk. 

Before you place a huge bulk order, consider the expiration dates/perishability of the goods you’re buying. 

You don’t want to essentially waste your money because you’ve overstocked an inventory that will spoil or become unsafe to use before you can actually sell it to customers. 

You’ll also need to consider your overall storage space.

Do you have room to house all those extra items — and if not, can you currently afford to rent out more warehouse/storage space? 

Above all, ensure that you can afford to pay a higher cost upfront on bulk items. You don’t want to end up in financial trouble because you took advantage of a “good deal” that quickly turned into a monetary misstep. 

Is Buying in Bulk Right for Your Business?

While it’s no secret that there are many advantages to buying in bulk, make sure it’s the best move for your company at this time. 

Remember, there are other ways to lower your operating costs until your business starts to generate the kinds of profits you want. 

You can outsource work to freelancers, handle your own content marketing and social media pages, and analyze your current workflow and equipment to find out where the process is falling flat. 

Looking for more tips and tricks on how to maximize your profits? Want to learn how to effectively market your own business? Curious about how to boost employee productivity? 

Our blog can help you with all that and more, so bookmark our page today to stay in-the-know.