Group Acquisition Purchasing (GAP)…How it Works
Welcome to our Group Acquisition Purchasing Program. We’ve all heard the phrase, “there’s strength in numbers.” The familiar adage holds especially true in economics and those four words sum up the power of our Group Acquisition Purchasing or GAP Program.
Each of us individually represents a very small purchasing power. Every time we make a purchase, we exercise our individual power. But individual purchasing power is not very strong in terms of negotiating the best prices for goods. In fact, as individuals, our purchasing power is like one ant working faithfully, but alone trying to build a mound…the typical individual acting alone simply cannot move a market or cause a supplier to take notice of his or her individual power.
There are many reasons why manufacturers, suppliers, or retailers can’t afford to pay attention to just your individual purchasing strength. We’ll talk about that later. But for now, let’s use a small example of how a group working together can move markets.
Let’s say a few of your neighbors and you got together and decided to approach your local operator of a fruit stand at a farmers market or roadside vendor, and you went with a specific plan of action and with one voice representing the group interest.
The plan: In exchange for the operator reducing the cost of a basket of apples by ten percent, every neighbor within the group agrees to purchase three baskets.
Assuming there are ten neighbors involved in the group purchase, the merchant stands to quickly sell 30 baskets of apples by offering a discount on each basket. The neighbors benefit from their group bargain and save much more than an individual consumer would, while the operator is able to enjoy a single transaction that greatly improves her sales for the day. That is the power of Group Acquisition Purchasing.
Let’s take a closer look at our neighborhood example to see more benefits that both parties, the consumer and supplier, receive.
Scale Economies. Although it’s an economic term heard mainly in classrooms and boardrooms, scale economies is a simple yet important concept in understanding the power of group purchasing. In our example, scale economies simply means that as the size or number of an organized group transaction increases, so does the efficiency of processing the transaction and that means the cost to the operator to do the transaction decreases. That means more profit margins per unit of product in the supplier’s pocket, even with the group discount! So you needn’t feel sorry for the operator who discounts his products for the group. The operator is able to do well because of the volume sold at one time.
Another way to consider the benefits to the merchant is imagine how much more time, labor, advertising, overhead, etc. would be needed to sell each of those thirty baskets of apples to thirty different persons…that’s if 30 different persons showed up after our group offer to purchase the baskets.
The neighbors also achieved scale economies in that they saved not only money, but time...they were more efficient purchasers. Now you can see why group purchasing is very attractive to everyone in the supply chain, from manufacturers to you.
Imagine if the group transaction had been arranged in advance with the operator and with just one neighbor needing to transact the sale and pickup the product. Even greater scale economies can be achieved. Or what if more neighbors were invited to join the group to increase the buying capacity? The savings begin to multiply even faster for both the store operator and neighbors.
Now imagine if we replaced our apples with the durable goods and services each of use to improve the quality of our lives. Now the basket can include: computers, cable and internet services, washers and dryers, even automobiles. Why not?
There’s no limit to the power of group buying, except our imagination. And like our apples example, the more identical the items each neighbor purchases, the less expensive it is for the group since the manufacturer at the plant can achieve even greater scale economies when the same product is reproduced thousands of time and pre-sold, without the need for advertising or trickling in of one sale at a time. Group Acquisition Purchasing brings significant efficiency into the production and manufacturing, distribution, and marketing of products. Now you see that with sufficient numbers, your buying power working in unison with your neighbors can move mountains.
With FAMACO’s state of the art e-commerce platform, the whole country is a neighborhood with automated ordering online, or if needed, offline by U.S. Mail or telephone. With the internet, there is even greater efficiency for you to shop and receive your merchandise at the touch of a key.
With the power of the internet open 24 hours a day, 7 days a week, ten neighbors can mean 10,000 purchasers! Imagine for a moment if 10,000 cable customers with an average monthly bill of $100 decided to work jointly through Group Acquisition Purchasing. You think if they spoke together and asked for significant and better discounts, the cable company would listen? With $1,000,000 in sales at stake, the cable company would be foolhardy not to! They can afford to disregard $100 a month, but not $1,000,000.
Back to the Basket of Apples
Let’s stop for a moment and ask how the neighbors were really able to achieve their savings. We know they used the power of the group, but the group had to work in unison with a common agreement, purpose, commitment, and voice. There were also other features present too to make the transaction successful including:
Selecting the product.
Contracting with the merchant.
Determining product availability and purchase period.
Negotiating the price and terms.
Agreeing to conclude the transaction.
Delivering the product.
Ensuring customer satisfaction.
Expanding group purchasing power.
We facilitate all the above functions without extraneous costs like membership fees just to participate. That’s why FAMACO does not charge you a membership fee to take advantage of GAP. Participate only when the offered item(s) represents a valuable acquisition for you. Moreover, we offer referral rewards for those helping to increase the group’s buying capacity.
We believe GAP is the best way to buy and save money on the most important goods for your family or organization. FAMACO is a community business leader networked with a national association estimated at 2.5 million persons. We’re proud of the services we provide, the savings we achieve and the American jobs we support through GAP. Isn’t it time you commanded an economic voice in the marketplace. Give GAP a try and see for yourself. Click here for the GAP Purchase Agreement that helps all of us buy and save together.