Cooperative Buying – The Mechanics
A buying cooperative is a group of
people or organizations that come together for each person or group's mutual
benefit. A cooperative buying model allows a group of buyers with a common
interest to pool their buying power in order to negotiate more favorable
pricing on goods and services. Cooperatives—also known as group buying
organizations or buying consortia—are set up to aggregate buying volume from
many different companies and increase the buying power from each individual.
According to the National
Cooperative Business Association (NCBA – An Amercian association), there are
about 250 buying cooperatives in the U.S. offering group buying services.
Cooperatives are owned by members
and are democratically structured. The important characteristics of a
cooperative are:
- Voluntary and Open Membership
- Autonomy and Independence
- Objective is to benefit everyone and , in fact, run it like a business. The profit is shared among the member/owners.
- The only owners are the members of the co-op.
Some of the benefits that accrue to
a member firm are :
Thus, cooperative buying can be an
important element of any organization’s procurement strategy because it allows
member organizations to aggregate volume of specific commodities, and in doing
so, achieve bettering than they could have on their own.
