Cooperative Buying Clubs

My first experience with a co-operative buying club was with a local group of home brewers here in Ottawa. Over the last 10 or 11 years, local homebrewers in the area have organised themselves into a very informal club which eventually took on the name The Members of Barleyment (and eventually spread its wings to cover most of the country). We all of course shared a passion for beer, and the majority of us were frustrated by the lack of selection of good brewing ingredients in the local shops in town. So someone got the bright idea of calling up one of the grain distributors in Montreal, and enquiring about purchasing from them directly. About 10 years ago now, our first club group purchase was made from Canada Malting. I managed to bribe a friend of mine with a Jeep to drive me the 200km to Montreal and load his vehicle up with about 15 x 25kg sacks of grain! Woo-hoo!

Nowadays we deal with a different distributor in Montreal - Gilbertson and Page - who has a much larger variety of brewing products. Just today we have finalized our annual order, which includes 100 x 25kg sacks of grain. Fortunately these days nobody has to make the run to Montreal to lug it back - we hire a shipping company to do that for us! The only thing we need to provide is a delivery location with a proper loading dock - but those are fairly easy to come by when you can promise someone an excellent selection of home brewed beers from over a dozen brewers, as payment.

In the last 2 or 3 years my wife and I have been involved in starting up some buying clubs for food and other consumer goods, so I wanted to take the opportunity to write a bit about our experiences doing this.

I should start off by mentioning that the use of the term "Co-op" may or may not be regulated by the International Co-Operative Alliance, depending on where you are. I am not necessarily speaking of the term as it is governed by that organisation. I am using layman's terms. So I'm talking about "little C" co-op, not "big C" Co-op.

I've got co-op in my blood - one of my earliest memories is of my father telling me and my brother about a new store we are going to start shopping at - the Co-op. In fact I did not know it at the time, but my father was one of the driving forces behind getting the community organised to start up the new store. It was a "Big C" Co-op - a member of Co-op Atlantic, and over the years it grew to be as big as any of the local supermarket chains in the area. And if my memory serves me correctly, the bargains offered at the store on consumer goods in particular were so huge that some of the other local retailers tried taking legal action against them for selling too low. I seem to recall a particular incident some 20 years ago now, involving a popular brand name of running shoes.

About 3 years ago now my wife and I got together with a few friends to start up a buying club with the Ontario Natural Foods Coop. I'm pretty sure these guys are Big C. And buying clubs through them are pretty formal, as opposed to my brewers' buying club, which is the epitome of informal. With the ONFC you need a minimum of 5 families to start your club, and you register them with the ONFC. You also need to give them someone's bank account info, so they have someone to come after for unpaid bills! But they have a huge catalog of organic and natural products - both food and consumer goods. and the prices are generally nothing short of amazing. Since the ONFC is also a major wholesaler to organic and natural foods stores around the province, buying from them directly can usually get you the same products at 1/3 to 1/2 the price of retail! But with these guys in particular, those savings come at a price - your sanity. They are disorganised, unresponsive, and generally-speaking closed-minded to suggestions on how to improve processes. Plus a few other things I'd rather not say in public. And that's on a good day! And this does not even include the backwards ordering process that requires you to have a copy of MS Excel - no, a generic spreadsheet will not work, it must be Microsoft. But nonetheless, the prices keep us coming back!

About a year ago now, driven mainly by our maddening frustration with dealing with the ONFC, we discovered Mountain Path, who are located just outside Ottawa, but also do deliveries to buying clubs throughout Ontario. They deal mainly in food products, not consumer goods like the ONFC, and their selection is not quite as broad as the ONFC, but it is still a pretty huge catalog. And if you buy mainly whole food staples like flour, rice, lentils, beans and so forth, the selection is actually better as are the prices. We find them easier to deal with, more responsive, and open to suggestions. and you do not have to formally register your club with them - you just need to pay them with good old fashioned money, and all is good :-)

But we maintain both buying clubs even though my wife and I order very little from the ONFC these days. I believe the big item we still order is a specific brand of natural laundry soap. Both organisations offer free delivery within Ontario with a minimum order size. The ONFC minimum order is $500 (IIRC), and with Mountain Path it is $300. Our ONFC buying club tries to place an order once a month, although there are times when we don't have enough interest to meet the minimum order size.

Since our ONFC club is more formalised than our Mountain Path buyer's club, we have specific roles and responsibilities doled out to the members. Since the ordering system requires MS Excel, naturally, one of our members who happens to have a copy of this software is responsible for collecting orders from the members, and compiling it into the spreadsheet to send off to the ONFC. Another member - usually my wife - is responsible for receiving and sorting the order. It arrives at our front door, and my wife then sorts it into each family's order. During this process she also has to reconcile what was ordered with what was delivered - since the ONFC can often be out of stock of particular items. Another frustration of ours with the way they operate is that they will substitute an out-of-stock item for what they consider to be a similar product, but in many cases the product is not at all similar. Or even if it is similar, it is not something that our member would have purchased. For example, instead of mushroom soup from a particular company, they may ship barley soup from that same company. Or instead of diced tomatoes, whole. Fortunately they do allow you to return such items on the next order, and get credit for it. But this leads us down the rabbit hole to a whole mess of accounting problems since they do not seem to be so great with their books. In fact our club has been working for almost a whole year now trying to straighten out a huge accounting mess. My wife has been the one dealing with it, so I am all-too-familiar with the problems that she has uncovered with the ONFC's accounting methods. It started out with them telling us that we owe them several hundred dollars, and after a year of going through our accounts with a fine-toothed comb, my wife finally almost have them convinced that they actually owe us a few 10's of dollars. What a ride it has been!

With our Mountain Path club we use the same approach that the brewers use for doing bulk orders of hops and grains - we create a google documents spreadsheet for the order, and invite individuals to enter their own orders into the document. This simplifies things quite a bit in some ways since one person is not burdened with the task of compiling the order. Though it can lead to errors in the spreadsheet (too many cooks), but generally speaking those errors are easily sorted out by someone who is familiar with spreadsheets. We don't order every month with Mountain Path - we order 4 or 5 times a year. Basically, whenever one club member is ready to place an order, they send an email to the mailing list we have set up, and ask if anyone else is ready too. This seems to work well for us. My wife also does the receiving and sorting for Mountain Path orders, but since they do not do substitutions of any sort, the reconciliation and accounting is considerably easier. Basically you just have to account for out-of-stock items, or items that were erroneously shipped or missed. Although if substitutions are desired, you can specify such when placing the order. For example, on our second last order they were out of a particular type of bread flour that we'd ordered, so on our last order when we sent it in, we asked if they'd let us know in advance if the flour was out of stock, and if so, we'd let them know of a substitute. Very nice customer service!

When the orders get delivered, of course they have to be paid in full, and by the person doing the receiving. This means that the money for the entire order will come out of that person's bank account, which may or may not be an issue. Since with both the ONFC and Mountain Path you can never really know in advance what each family will owe on the order (because of out of stock items, or items missed), you cannot get each family to pay the receiving family in advance. With our Mountain Path orders, we can figure out as soon as the order is sorted, who owes how much. And with both clubs we have a very strict rule that orders have to be picked up by each family the day they are delivered. So when someone comes to our house to pick up their Mountain Path order, they just write a cheque to us for their amount, and away they go. We can get those cheques deposited before Mountain Path cashes our cheque, so it is not an issue for us. With the ONFC it is not so easy because it can sometimes take a week or more to get a copy of the electronic invoice which is the authoritative copy of what the ONFC thinks the order consisted of. Did I mention that they are unresponsive? I thought so :-) So when the family comes to our house to pick up their order, we have no idea exactly how much they owe us. So the system we have come up with to compensate for the ONFC's unresponsiveness, is that each family gives us 2 cheques - one is written out for 80% of what we think their final total is for the order, and the other is blank. The 80% cheque we can deposit immediately into our bank account. When we finally get the invoice from the ONFC, we can work out the real totals and then fill out the 2nd cheque for the difference, and cash it. It is a pretty major PITA, but as mentioned, the prices keep us coming back for more.

If you are considering setting up a similar buying club, here are some things to consider. First, I'll mention that if you want to go with the ONFC, you can contact them and ask if there is already a club in your area that is accepting new members. Our club was not open to members in this manner, because we wanted to keep it small. But more on that in a bit.

Buying clubs seem to work best if the members are all in close geographic proximity - e.g the same neighbourhood. Our initial ONFC club was not like this, and we eventually split in 2 in part because of geography since we were mostly in 2 different neighbourhoods. Another factor that lead to our split-up was that different members had very different personalities when it comes to this sort of thing. Some of us were very laid back almost to the point of being disorganised, while others were precisely the opposite and had to have every T crossed and I dotted. This manifested itself mainly in the shared of duties and work surrounding the operation of the club. Some of our members wanted to maintain a rigid record of which families were doing what work for each purchase - and wanted to ensure as much as possible that everyone was doing a similar amount of work. While others just didn't care so much. For example, my wife was doing a considerable amount of the work - and still is for both the ONFC and Mountain Path orders. While other families just place their orders and come pick it up when it is ready. We don't really care about the extra work - my wife enjoys doing it. And with some jobs it just makes sense to have one person doing it all the time. Part of the reason we got into the huge accounting problem with the ONFC is that we bounced around various jobs from family to family in order to keep the workload even, so our accountant was not able to keep a close eye on things because that task kept moving around. One final factor which lead to the split up of our group was that some families were placing enormous orders while others were placing relatively tiny ones, and somehow or another this lead to animosity within the group I think in part due to the rigid notion of job-sharing. But we eventually parted with no hard feelings, and both groups are better off as a result.

Another factor to consider for your buying club, is things like refridgeratables. This is not an issue with our Mountain Path club because they do not to the best of my knowledge carry anything that falls into this category. But the ONFC has a huge selection of frozen meals, frozen veggies, organic milk and cream, and so forth. In our first few orders we hadn't really considered this factor, and the family who was receiving ended up completely overwhelmed as a result - they did not have enough fridge or freezer space to store everything that had been ordered by all the families. Eventually we did get it sorted out though, and we came up with some rules around this, and made sure to be checking before placing the order, how much stuff was being ordered that had to go into a fridge or freezer, and whether or not the receiver could accommodate this quantity.

And finally, give careful consideration to how big or small you want your club to be. Smaller clubs are easier to keep organised without getting too formal - although that having been said, my brewers' buying club is pretty big now, extremely informal, and still works. But bigger clubs will give you more choice and more flexibility. As noted, sometimes our ONFC club cannot place an order because we do not have enough to meet the minimum.

Another area where you might want to consider an informal buyers' club is with purchasing meat from local farmers. We have been buying our meat from local farmers for a good 10 years now, and fortunately we have connected with a farmer who will sell a half side of beef or pork, whereas most will only sell a whole side. And we have sufficient freezer space for that much meat so we have never had the need to try to get together with other families to buy our meat. But when I recommend this method of buying meat to friends, I often hear them tell me that it is just too much meat for them to deal with. That to me sounds like the perfect reason to get together with friends and buy a side of beef or pork, and then split it up using whatever means you decide upon. The prices are generally better than supermarket prices if you find the right farmer, and they can get better still depending upon what you decide upon in splitting it up. For example, I know a guy who does not want the lower-quality cuts that go into ground beef and stewing beef. But I also know someone who only wants ground. Put those 2 together, and the guy who only wants ground can get his ground much cheaper, as can the guy who only wants the better cuts - a match made in heaven!

Getting together with friends and neighbours to form both formal and informal cooperative buying clubs can be a great way to save money on high-quality items, but it can also be a great way to help create a real sense of community. We highly recommend it!

If you know of similar opportunities for Buying Clubs in your area, perhaps you'd like to leave a comment on this article with details. Or better yet, visit the forum that we have set up precisely for this purpose and start a thread that includes your geographic area in the subject line.