New Money: Power of Many with Group Purchasing
We take a deep dive into the advantages of group purchasing.
Group purchasing could offer some major advantages for your association. In fact, it can be a win-win for everyone paying the bill. Here’s how.
A few years ago, the National Human Services Assembly was looking for a way to add member benefits and increase the organization’s nondues revenue.
Irv Katz, NHSA president and CEO, soon realized that its members, which include large nonprofits like United Way Worldwide and Girl Scouts of the USA, spend 37 percent of their revenue every year on non-programmatic, non-personnel overhead.
“That’s everything from office supplies to travel services,” he says. “So I thought if we could give them a discount on these purchases, we just might have something.”
NHSA worked with PurchasingPoint to launch a group-purchasing program, which saves participants 33 percent annually. Here, he shares three tips for running a successful program:
You can’t go it alone. “No matter how large a nonprofit is, a single organization cannot leverage the same discounted prices as a multi-organizational group-purchasing entity,” says Katz. “The smartest thing we did was to partner with an existing group-purchasing organization.” Katz says working with a GPO gives you a whole package of vendors to promote to your members, plus you get better pricing. It also takes the association out of the vendor vetting process and puts it in the hands of people who know what they’re doing.
Make it easy for members to use. “What was really useful was to create a portal on our website where members could log in and get access to the group-purchasing details,” Katz says. While it’s not at the point of “click and purchase” like Amazon.com, the portal puts a list of vendors and the correct discount codes all in one place. “The easier, the simpler, the more used the program will be,” he says.
Communicate constantly. NHSA learned that it had to educate its members on the value of the program so that they could communicate that value down to their chapters and affiliates. “After all, the more people using it, the better the discount,” he says. NHSA set up a discussion between each member and PurchasingPoint to help determine what vendors and product lines are most valuable to them.
Katz says purchasing was up more than 10 percent in 2014, and he’s hopeful for more growth this year. NHSA also found a way to create an additional revenue line for the organization. “We actually have groups who are not members of the assembly pay a fee to us to be part of our group-purchasing program,” he says. “We’ve become an off-the-shelf solution for them.”