Today savvy shoppers buy items in bulk whenever possible. Whether you choose to obtain produce fresh from the field or you enjoy cruising the bulk foods sections of health food stores to search for nuts, grains, or other nutritious items, you’ll likely realize cost savings. Why, indeed, do bulk purchases help consumers save money?
Taking Full Advantage of Economies of Scale
Buying in bulk allows you to benefit from “economies of scale.” When you complete a bulk purchase, you’ll enjoy the opportunity to obtain volume discounts. The seller has not taken the time to divide, process, and package your merchandise into smaller quantities for marketing purposes. You receive a portion of the total cost savings as a result of accepting the inconvenience of performing these tasks yourself.
An Illustration of Bulk Purchasing Cost Savings
For example, just consider one popular bulk purchasing item. Have you ever shopped for nuts? You may have noticed you’ll typically pay significantly more per almond, walnut, or pecan when you select these foods in smaller and more fully processed quantities. Buying a large sack of fresh unshelled nuts directly from an orchard, cracking them yourself, and subdividing them into meal portions costs much less than selecting pre-packed, heavily salted nuts in plastic containers or tins from grocery store shelves.
Nut producers devote a lot of labor and energy preparing, salting, flavoring and packaging their wares for consumers. They typically work to supply aesthetically appealing uniformly sized and attractively presented products as much as possible. They discard the nuts which have sustained insect damage, or which appear stunted in growth. Many commercial nut sellers will even mix different varieties together, enabling the volume of lower-cost nuts (such as peanuts) to partially offset the price of more expensive varieties (such as pecans). By purchasing nuts in bulk and preparing nut mixtures yourself you’ll save money!
Exploiting The Economies of Scale
Consider bulk purchases usually entail some degree of inconvenience. Whether you select bulk grains, bulk candy, bulk cheeses, or bulk milk, you’ll need to consider storage issues. The consumer foregoes the convenience of individually-wrapped and prepared merchandise in exchange for cost savings.
Possibly the clearest example of this phenomenon occurs in the commodities market. If you fail to sell a contract for corn or orange juice in time, you’ll have producers arrive on your doorstep delivering your shipment! During previous generations, stories abounded of traders in this situation.
If you prepare well in advance for bulk storage, this form of purchasing holds some advantages. It offers the power to control economies of scale. Don’t overlook these benefits!