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Thread: Bulk Purchase versus Small Frequent Purchase

  1. #11
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    Default Re: Bulk Purchase versus Small Frequent Purchase

    Quote Originally Posted by hades_leae View Post
    Bulk purchases are definitely worth the cost because the product per unit is so much more cheaper, but not all businesses can afford to do it, and not all businesses actually need that much quantity.

    I love the concept, many big businesses take advantage of the because it's good for profits. You want to get your products as cheap as possible to maximize unit profits. I plan to do it when I start this new business in the future because I know it's worth it. I just don't like knowing that if things don't work out, then I have a bunch of products and lots of money lost.
    Yup, I think some businesses compensate the decision to buy more to get the products for cheaper by expanding the business so the equation would work out and it does sometimes work but ample research really has to be put in to make such a decision since the risk also increases greatly even though you are getting a huge discount. I think it's often better to just increase your risk in small increments but sometimes you also just have to go for it.

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  3. #12
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    Default Re: Bulk Purchase versus Small Frequent Purchase

    It would seem that bulk purchases would be the way to go. However, this may not be the best case scenario in all situations. Goods that are easily perishable would have to be stocked according to the expected demand and the estimated shelf life to prevent losses from spoilage. There may be other goods with extended shelf live but you may have to be careful when bulk stocking some of those items because even though there is potential for attractive gains on these products, they may move very slowly and hold up space that could be used to house faster moving items which may bring a smaller return but have a more rapid rate of turnover.

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    Default Re: Bulk Purchase versus Small Frequent Purchase

    Quote Originally Posted by explorerx7 View Post
    It would seem that bulk purchases would be the way to go. However, this may not be the best case scenario in all situations. Goods that are easily perishable would have to be stocked according to the expected demand and the estimated shelf life to prevent losses from spoilage. There may be other goods with extended shelf live but you may have to be careful when bulk stocking some of those items because even though there is potential for attractive gains on these products, they may move very slowly and hold up space that could be used to house faster moving items which may bring a smaller return but have a more rapid rate of turnover.
    That's also my concern whenever bulk orders is mentioned - perishable goods cannot be stored for so long because of their short shelf life. Spoilage will just cause losses. However, there are times that even perishable goods can be ordered for delivery in bulk when the demand is so great. This condition usually happens during the yuletide season when fruits overflow in the shelves because people gobble them by the bulk. One example is the chestnuts that vendors would order by the tons because they sell hundreds of kilos of cooked chestnuts in one day. But they are discerning in their estimates so as not to exceed their expected sales otherwise they will suffer losses with the spoiled goods.

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  7. #14
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    Default Re: Bulk Purchase versus Small Frequent Purchase

    Any business owner, even those that are new to the game will know just how important stock is. One of the first things that you'll learn is what stock you can buy in bulk and what stock you have to buy as and when you need it, and even if you yourself aren't sure then you ill employ a warehouseman that is experienced in that side of things. Buying in bulk is cheaper and that will mean that you will have more profit from what you sell, but not everything can be bought in bulk for various reasons and if you don't know what can and what can't be, in the beginning it can be a very expensive mistake to make.

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  9. #15
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    Default Re: Bulk Purchase versus Small Frequent Purchase

    In addition to the rate of movement of your inventory and price breaks it is also important to make sure there is available square footage in the warehouse to buy in bulk. In my case there are a couple local producers that do provide the ability to purchase smaller amounts more frequently at the same cost you would get if buying a bigger amount. This usually becomes an option after you have established a working relationship with the supplier. The biggest cost for a producer is in initially getting the equipment to be able to produce goods, once they have the ability to produce, in most cases switching production can be done efficiently/cheaply. Unless we have a huge customer who buys a lot from us and it takes awhile to get the inventory to begin with we usually go with small more frequent purchases. This also allows us to provide a larger selection to our customers.

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  11. #16
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    Default Re: Bulk Purchase versus Small Frequent Purchase

    Before buying in bulk price fluctuations must also be taken into consideration. If you know the price of something you intend to buy in bulk will be dropping long before you stock runs out then you'll make some significant losses. How fast you'll be selling goods you bought is another factor that must be taken into consideration. If you'll be filling your warehouse with merchandise that will take years to sell then buying in small quantities would be the wiser choice because should cheaper alternatives hit the markets . . . again you lose money.

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  13. #17
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    Default Re: Bulk Purchase versus Small Frequent Purchase

    It would ultimately depend on the items you intend to purchase and how frequently you use them. Buying in bulk would be a great idea if you intend to purchase something that you use on a frequent basis, say office or cleaning supplies. However, items that easily expire or are not used often should not be bought in bulk. For instance, ink cartridges dry up if they remain in the stockpile for too long. You just need to buy a few instead of ordering in bulk.

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    Default Re: Bulk Purchase versus Small Frequent Purchase

    When we started with our website, we tried the small frequent purchase method as we did not have a lot of others but it is plagued by a lot of variables which we cannot control like:

    -Frequent delays
    -Inconsistency from suppliers
    -Extra taxes

    And due to this, we never had full control over the supply chain but ever since we have switched over to the bulk purchase route, we can control the supply chain much better and this has led to better sales as well, so it is well worth investing in the bulk model to be honest.

  15. #19
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    Default Re: Bulk Purchase versus Small Frequent Purchase

    I agree with most of the above points. Its not as simple. You have to strike a balance. And that is what you're hired for when it comes to logistics. You need to strike a balance, develop or use systems that will self-adjust or at least alert you when the inventory runs low.

  16. #20
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    Default Re: Bulk Purchase versus Small Frequent Purchase

    I agree with most of the writers. One thing that people often don't consider is the transaction costs. It is easier to receive a delivery of 10,000 widgets than to receive ten different deliveries of 1,000. So I think the bias should be towards bulk purchases unless there's some compelling reason to do otherwise.

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