Bulk Buying

Here's an article i found on MSn Money
Bulk Buying 101Posted Dec 13 2007, 11:20 AM by Karen Datko
This post comes from Myscha Theriault at partner blog Wise Bread.
While I've been developing this article for a while now, Philip Brewer's recent article on bulk-purchase investment returns really kicked things into high gear. Most of us have known for some time that purchasing in bulk provides decent financial returns. Now, with Philip's excellent analysis of the potential percentage rates, you may be more motivated than ever to get started with large-quantity purchasing.
The problem? Bulk buying sounds way simpler than it actually is. Where do you store it? When does it make sense to buy in bulk versus small quantities? It's enough to make your eyes cross and your brain start to feel pickled, particularly if you've never shopped this way before. What's more, it's far from the sexiest financial subject matter out there, which can make it very difficult to analyze and apply to your personal situation.
Here's a nuts-and-bolts article covering what I see as the five major areas of consideration.
Storage
Where do you store it and what do you store it in? Some items come in packaging that makes them easily stored as is. For those that don't, the first order of business is making sure the container is as airtight as possible. From there, the next level is bulk-storage versus daily-usage containers. For the larger amounts of things, I like the 5- and 25-gallon white plastic buckets with the matching snap-on lids. Sometimes I'll pick a smaller bucket depending on the item, but those are the sizes I use the most. The cheapest place I've found to buy them? Home Depot.
While the larger buckets are great for safe long-term storage of large-quantity dry goods, they can be a bit cumbersome for daily use. For easy grab-and-use access in the kitchen, I love clear containers. These can take a variety of forms depending on your personal taste and budget. What's important is that you have manageable access to things you need on a regular basis, like sugar, tea, spices, flour, beans and coffee.
Freezer issues are a bit different, but the overall concepts still apply. Some things can get tossed in as is, using only the packaging they were purchased with. Others might require GladWare or freezer-storage bags.
Where to store it requires flexibility and ingenuity, particularly since everyone's situation is different. Here are three ideas I think everyone can use to some extent:
Sleep on it ... literally. Pick up a set of bed risers and create a pantry in the unused real estate under your bed. If you really want to get fancy, you can invest in some wheeled under-the-bed storage containers, or make your own out of mismatched dresser drawers and castor wheels. If not, just go with the "raising up on risers" trick and go nuts with bulk toilet paper and cases of vegetables and tomato products. The cheap metal frames work great for this, and you won't end up with wobbly bed legs.
Hang it off the door. Again ... literally. There are all kinds of products out there at various department stores that hook over the tops of doors, keeping even the pickiest landlord happy. Some of them have fabric pockets. Some have sturdy wire shelving for canned goods. This may not work for the politically correct home decorators out there. But those of you renting may find it valuable for reaching larger financial goals sooner.
Shove it in a corner ... a corner pantry, that is. I've drooled over the one my friend has had in her kitchen for years. The major benefit of these things is that an unbelievable amount of stuff can be stored in a convenient location where the square footage is usually ignored. Include a canned-goods rotator, and you're really in business.
Renters can make a canned-goods rotator on the cheap by using a rod or tension cable across the corner and hanging a long curtain in a fabric that makes sense for them. Using a folding screen room divider would also be another way to go. My friend's corner pantry is built in, and more traditional in appearance with a decorative soffit area and folding shutter doors. However, this could easily be done with a giant magnetic chalkboard door for a funky loft look or raised all the way to the ceiling with no soffit for a more streamlined custom look and even more storage. Another thing that's cool about this particular friend's corner pantry is that instead of just having a wall that goes straight across the corner forming a basic triangle of storage space, the walls of the pantry start out perpendicular to the walls of the room and then cut across.
What to buy
While individual items will undoubtedly vary from household to household, I've come up with three flexible categories that I believe everyone can relate to: non-food consumables, family favorites, and something I call "consumable infrastructure." Need a little more detail?
Non-food consumables. Again, this is different for every family, but can include things like batteries, cotton balls, shampoo, deodorant, feminine products, cotton swabs, laundry soap, toothpaste and the like. Basically, this category includes any non-edible items you have to replace on a regular basis.
Family favorites. These include any items your family goes through on a regular basis that are unique to your home. For us, canned tomato products are high on the list, as are frozen one-pound bullets of turkey sausage, 10-pound bags of chicken legs, bulk canned clams and pasta. Again, this list will differ from family to family. Honor your own style. If black beans and peanut butter top your list, go with that. Brown basmati floats your boat? Well then, you know what to do.
Consumable infrastructure. What goes into this category also fluctuates from family to family, but there are some fairly predictable subcategories, like oils, sweeteners, vinegars, seasonings, flours, grains and other base ingredients. In short, these are items you use to put other things together, like marinades, baked goods, dry mixes, casseroles, homemade salad dressings, dips, sauces and other menu items.
Obviously, some homes will stock up on such things as tofu, coconut milk and curry powder, while others might concentrate more on frijoles and cornmeal, or perhaps cardamom and eggplant. Whatever your preferred cooking style, I'm sure you get the idea.
Why buy bulk?
What are the benefits of buying in bulk? Philip Brewer has already done an excellent job demonstrating the potential investment returns of this strategy, so I won't repeat that here. There are a few other benefits, however.
Emergency savings extension. Food storage and pantry stocking are a powerful part of your three- to six-month emergency savings plan, which, in my opinion, should not be ignored. Bulk buying, if done diligently, can be markedly less expensive and also go a great distance toward supplementing that emergency savings fund in times of need. No need to take valuable time away from job hunting or caring for an ill loved one to shop for sales (or shop at all). You'll be ready to rock and roll if you are stocked up for any occasion. Unexpected crisis situations really increase your personal vulnerability level, which for me is when I'm more likely to overspend due to lack of time and energy for such things as budget grocery shopping. Being stocked up protects me from this.
Household harmony. In a nutshell, if you have the cash in your budget already, why go through the hassle of commuting, shopping and waiting in line multiple times a month or week when you can skip the aggravation and deal with it once every two to four weeks or less? The peace of mind and ability to roll with the punches that come with being well- stocked is one of the greatest perks of stocking up. Youngest child forgot to tell you about tomorrow's bake sale? No problem. Your spouse has an unexpected case of the sniffles? Got it covered. Everything's on hand for those emergency batches of cookies and chicken soup.
Extra liquid cash. Eventually, the savings of this practice carve out enough cash so you can take advantage of larger up-front savings, invest more, or have a little more mad money. It's up to you what you do with it, but having more available liquid cash is always a good thing in my book.
How much?
This sounds like a simple question until you start factoring in all the variables for you and your family members. The three main factors I like to consider when making these decisions are consumption rate (usage patterns will vary per person and item), available storage space, and your specific situation (financial goals, available cash, other monetary priorities). While you'll need to work out the actual amounts for yourself, considering the above factors that are unique to your home should guide you considerably.
Challenges and strategies
Carving out the up-front cash. If you're having trouble finding the extra $2 for bus fare, setting aside funds for bulk shopping can be pretty daunting. It's OK to start small. Bulk toiletries like large-quantity bottles of shampoo provide an excellent value for your startup dollar, as do beans and rice. To get the biggest bang for your bulk-buying buck, however, my money's on yeast and spices. Use the extra funds saved from those purchases to make a few more precision purchases with each new shopping trip. While you won't be super-stocked overnight, it will add up over time and you eventually will be in the driver's seat.
Staying focused and making it a priority. Some of us have a hard time avoiding feelings of discouragement and deprivation. How do you set yourself up for success? One strategy is to choose startup bulk items with a high personal "wow factor" or a huge initial savings return. Then, combine this strategy with short-term financial goals you can easily accomplish with the savings you achieve. Being able to get excited about the initial returns from implementing bulk buying in your lifestyle will go a long way toward staying committed for the long haul.
Getting (and staying) organized. This is a challenge shared by nearly everyone, regardless of the amount of space, storage infrastructure and startup cash available. Start small and pace yourself. You want to be able to get a handle on the situation, as well as stay on top of the new system. Bulk buying is one of those concepts that sounds simple until you start trying to implement it across the board and realize all of the "sub-issues" that come along with it, not the least of which is figuring out where the hell to put everything you just brought home. Also, not having a system that is user-friendly can sabotage the best-laid plans of any beginning bulk buyer. Sticking that case of creamed corn in the back of the closet might seem like a good idea at first, but if you can't get to it when you need it (or forget it's there altogether), it does you absolutely no good to have it on hand. Further, don't forget to honor who you are and how you live your life. Choose an organizational and implementation system that flows with your particular home and lifestyle.
Analyzing the deals. Not every bulk-purchasing opportunity is a smart buy. This goes back to the power shopping article I wrote a while back. A strong working knowledge of the per- unit costs of items you regularly buy is extremely helpful. Gary Foreman had an excellent suggestion for this in my recent interview with him: Get a price book. Here's a link to an article with a printable page to start your own.
Keeping it sexy. Basically, how do you remain excited enough about bulk buying and pantry stocking to stick with it and not get bored? The consumable infrastructure category really comes into play here. When you have the base ingredients to make most things, it's easier to get excited about strolling for the perfect avocado or planning a romantic dinner. We recently had a discussion about this at Wise Bread. Philip, I believe, mentioned how enjoyable it was to cruise local open-air markets for fresh items and supplementals when he knew he had everything else on hand at home. I know I have more fun popping into the grocery store for a few things if we want to have a "date night" quality dinner here than if I am trying to do that along with stocking up for the month or quarter on certain items. Having the freedom and flexibility to try a few new things keeps us focused.
That's Bulk Buying 101 in as much of a nutshell as I can put it. Additional suggestions, as usual, are welcome.
Other articles of interest at Wise Bread:
“Create the loft look for lots less”
“My 10 best money-saving pet hacks”
“Peanut butter: The poor man’s protein”ney