What is an ecommerce cooperative?

History · 2019-03-01

From the Empowery archive (2018–2022). The co-op chapter closed; the operating ideas still hold. Independent. Together.

What is an eCommerce Cooperative?

Most eCommerce companies across the board are dealing with a litany of economic challenges and financial pressures in the online marketplace. It seems as if “doing more with less” is no longer a catch phrase but a means of survival.

These are the days of budget cutbacks, revenue reductions, and limited resources. As purchasing requirements become more complicated and budgets become more strained, procurement or physical product production are forced to continually seek innovative ways to deliver savings and efficiencies.

Many organizations don’t realize just how much an eCommerce cooperative can help because there is only one by the name of Empowery. As an important tool in the procurement toolbox, the benefits available through a purchasing cooperative may be more valuable now than ever before in the eCommerce industry.

Cooperative Buying Power by Definition

A cooperative purchasing model allows a group of buyers with a common interest to pool their buying power in order to negotiate more favorable pricing on goods and services. Cooperatives are set up to aggregate purchasing volume from many different companies and increase the purchasing power from each individual.

According to the National Cooperative Business Association (NCBA), there are about 250 purchasing cooperatives in the U.S. offering group buying and shared services. Many of these cooperatives offer members more buying power which is specifically geared toward the scientific arena. With Empowery, the marketplace is dedicated to eCommerce.

While cooperatives can vary in size and membership base, they have all basically been built upon a common set of core values and principles. The NCBA describes these principles as:

Voluntary and Open Membership
Democratic Member Control
Members’ Economic Participation
Autonomy and Independence
Education, Training, and Information for Members
Cooperation among Cooperatives
Concern for Community

So how can cooperative buying power help you?

Cooperative purchasing can be an important element of any organization’s procurement strategy by providing purchasing or physical production management with the opportunity to be proactive. It allows members to the aggregate volume of specific commodities, and in doing so, achieve better pricing than they could have on their own. The saving opportunities are exponential.

However, an eCommerce cooperative is much more than simply good pricing.

Cooperative buying power can also deliver significant time efficiencies in terms of contract development. Consider the amount typically spent on administrative costs associated with preparing a bid, including research, resources, and time. By allowing the contract management and administrative functions to be provided by the cooperative, the costs associated with these time-consuming tasks can be significantly reduced, if not completely avoided.

The following are a few of the many benefits members can expect to take advantage of when utilizing a cooperative:

Strength in numbers: the sheer volume of purchasing power aggregated by the size of the cooperative provides each individual member with economies of scale that they would not have been able to achieve on their own. This alone is a tremendous benefit.

Superior pricing: a purchasing group is generally able to negotiate lower prices for goods and products than any of the single members in the collective. Leveraging this aggregate purchasing power allows members to take advantage of superior pricing. In addition to up-front pricing discounts, many cooperatives provide lower costs in other ways, such as rebates for certain products, or patronage discounts.

Best practices: a cooperative provides access to the combined knowledge of all of its members, which it can tap into to identify best practices and efficient methods to reduce total cost and extend efficiencies. This combined knowledge and expertise is invaluable to the cooperative in terms of ensuring that it is always employing best practices, processes, and technology.

Strategic value and time savings: many eCommerce business owners don’t have the time or the resources to research new product categories, source competitive quotes, and negotiate pricing. Business owners will realize tremendous time savings when a contract development process has already been conducted by a cooperative. By eliminating time spent on more labor-intensive tasks, resources can be reallocated to focus on more strategic projects.

Spend analysis and quality contracts: many cooperative purchasing organizations will conduct a spend analysis across the membership to identify goods and services, as well as suppliers, that are the most meaningful in particular contracting areas. This will result in a supplier portfolio that includes many of the suppliers most committed to meeting the specialized needs and delivery requirements of members.

Cooperative purchasing is a time-tested model that can make a significant contribution to its members’ bottom lines by lowering costs, reducing redundancy, and freeing up valuable resources for reallocation to other strategic business initiatives. The time and process efficiencies, knowledge, and expertise available through a cooperative can be priceless.

Ultimately, a company, entrepreneur, or business owner should utilize our eCommerce cooperative that will act as a reliable business partner in helping to support its mission and achieve its fundamental business growth goals.