What Do You Know About Buying Groups?
Question: What do you know about buying groups?
Answer: There are variations of buying groups in our industry—from a couple of distributors banding together loosely to companies that offer other services and approaches. To answer this question fully, I went to Jamie Coggeshall, president of AIMastermind (AIM), a group that purely is a buying group.
For full disclosure, I am a business services member of AIM and learned a lot from this chat with Jamie.
Buying groups are made up of distributors seeking a better relationship with their suppliers. Often, suppliers give preferential pricing and service to distributors who place a certain level of orders with them annually—say $50,000. It’s great for these few.
A buying group negotiates these pricing discounts and enhanced relationships for all of its members. Jamie tells me that pricing discounts, including "insane" shipping rates, are the first and most visible things that draw AIM members. However, the sales support and relationships between the supplier and distributor members might be the No. 1 benefit of a buying group.
AIM consists of more than 1,300 distributor members, and its annual sales exceed $1 billion—a powerful negotiating position. AIM members pay $59 per month to be a member.
If you have been outbid and wondered how that happened, or you just want to explore better pricing and service, you might want to check out buying groups. Please keep in mind that some groups have membership restrictions, such as minimum annual sales or minimum years in business. They exist in various forms, from a pure buying group of a couple of distributors to a large group to a hybrid type of service. A buying group might give you an edge over your competitors and could be worth exploring.
[Editor’s note: There are numerous buying groups in the promotional products industry, such as Facilisgroup, Peernet Group and ImpactMDS, Legacy Group, Partnering Group, Premier Group, Reciprocity Road and Universal Unilink, among many others.]
Please email accounting questions you would like considered for the column to HGatter@AccountingSupportLLC.com with the subject line of "Ask the Accountant."
Harriet Gatter, owner of Accounting Support LLC, was an ad specialty distributor for 23 years and an adjunct professor of accounting at Neumann University. She sold her ad specialty business in 2012, became certified as a QuickBooks ProAdvisor, and now works exclusively with ad specialty distributors nationwide on their QuickBooks, order management and accounting needs.