Monday, September 9, 2019

Tiny Privileges from Buying in Bulk

I went to Target this weekend for some last minute shopping for our upcoming trip to Europe with Baby AF. It was our third trip to Target, recently, because no matter how many lists I make there's always something I think of later.

The worst part is that, thanks to an ongoing renovation at our Target store, I can't even engage in my favorite junk food shame: ordering the chicken fingers from the little food court in the store, placing the cardboard container directly on the seat of the cart where rando babies put their rando bums with only a napkin in between, and then walking through the store to shop for the things I need. Sure, I get some weird looks, but they are just jelly of my chicken.

So I'm out here shopping, without chicken, and I notice one of those little tags that says "Buy two of the ginormous dish soap that you like so much, get a $5 Target gift card". These things have been my Target hack for a long while: I usually have one of these cards in my wallet from the last time I shopped there.

I happened to have dish soap on my list, and the larger size was already cheaper per ounce anyway. Throw in an extra five bucks off and it ended up being a way, way better deal than the size I normally buy.

The last time I got one of these cards, it was for buying two huge plastic wrapped containers of toilet paper. Because I'm the kind of nerd who calculates the cost per square foot of various toilet papers, I already knew the Up & Up Target brand was the best deal. But hey, take five more bucks off of a pretty minor purchase, and it's a steal that will keep us stocked for months.

Buying in bulk is no great personal finance secret. If you're sticking to things on your list and buy stuff you'll actually use, you end up saving pretty significant money. The allure of Costco is based entirely on consumers getting big discounts in bulk.

But something occurred to me today, shoving two years worth of dish soap into my cart. This basic strategy of personal finance, this thing so many of us do, is based on some assumptions that aren't true for everyone.

For one, the strategy of buying in bulk assumes that the consumer isn't cash constrained: that she has extra slack in her monthly budget to buy six months of toilet paper with this month's money. While that's certainly true for us and we have no problem stocking up on good deals, the story's a bit different for anyone who's living paycheck to paycheck, or who is in the middle of paying off credit card debt. For that consumer, they're in a position where they have to spend this month's money on this month's supply of TP, on this month's detergent, and on this month's food.

But let's say that they just barely had enough money to do some bulk purchases. These bulk buys tend to be things that have a long shelf life. Meaning that if you're barely skirting by in your budget, buying a good deal on stuff you can stick in the garage means you're probably not buying some things you might need and want this month, stuff that you often can't buy in huge quantities: like fresh produce. Which goes to say, for a lot of consumers, the decision to buy in bulk has opportunity costs.

And as I was loading the back of our hatchback with our bulk buy goodness, I was wondering how someone who took public transit would even make this happen? Do you ever see anyone taking their open boxes of stuff from Costco to the bus station? When buying in large quantities ends up with a haul a human can't carry all at once, what are carless households supposed to do? (For context, 8.7% of US households don't have a car: roughly one in every eleven.)

Now, I don't want to pretend that buying in bulk is the foundation of a winning personal finance strategy: that all you have to do is stuff your SUV full at Costco and you're going to be on your way to an early retirement. These sort of savings are not going to make anyone rich.

But there is a cruel irony in that the people who would really benefit from an extra couple hundred bucks from bulk buys are exactly the people who can't take advantage of the strategy.

I also am struck by how much I take this sort of regular advantage for granted. I take it for granted that I have enough cash to load up on any sort of deal that I stumble upon, and still have enough left over to buy whatever else we may need for the month. I take it for granted that I have a car I can drive to the warehouse store and fill with bulk goods.

I suppose rather than just complaining about the state of things, every few years or so I should try to come up with a solution. So if there are any retail executives or app coders our there, here's my half baked idea that you can run with if you want.

I want there to be an app where customers who can't easily afford bulk purchases can buy a 'share' of a bulk item on an app. Like I'd buy half a giant pack of paper towels, and some guy across town would sign up for the other share. Customers would have a smaller selection of popular items to pick from, and the store would break up the item into smaller quantities for the customers. Once a month on a Saturday, there'd be a pick up day for everyone to pick up their lots. Maybe you could do some sort of delivery set up, too.

Customers get the per-unit savings of buying in bulk, without having to outlay the cost of actually buying the bulk package.

There's obvious benefits for customers here, and that's always where my head and heart are at. But I'd like to think this could be a win-win for these stores as well, since these are people who are very likely not yet customers of Costco or other big box stores. If they happen to shop at Target or Walmart already, they're likely not buying the same sort of items they could under this system where multiple customers split a single bulk container.

Who knows if this idea has legs. While I like to think customers would sign up for such a thing, and that corporations could benefit from the additional sales, I really have no idea. That sort of analysis is for people much smarter than me. My job is to noodle over these things, write a bit, and then just feel some gratitude for all the little advantages I have in my stupid little life.

And there are a lot of them. I've always been a lucky person. I should try to remember how preposterously fortunate I am the next time I'm chomping on some fried chicken, calculating the cost per ply, and generally weirding out the customers next to me.

As always, thanks for reading.

*Photo is from Jeepers Media at Flickr Creative Commons.

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  1. That a great idea, but the execution sounds really tough. It'd only work if they live near each other. It'll be perfect for neighbors. Or maybe a company can buy those bulk items, divide them up, and deliver them. That might work. Margin seems too small, though.
    Have a great trip!

    1. I suspect you're right, Joe. I'd hope that the individual stores would be incented to do the splitting (addresses the issue of people living close to the store, and without a middle man then perhaps the thin margins provide enough room when considering the extra revenue they'd get). Still, there is a long history of apps and programs aimed at people with less money not working all that well.

      So much of our innovation and attention seems directed at those who already have a lot of money. It'd be nice if there were a way to direct some of this energy to those who don't have much.

  2. This is the way our family community worked, honestly. If there was a great sale on onions, the person shopping would buy in bulk and distribute to the rest of the family. Someone else would find a great sale on fruit, or veggies, or meat, rinse and repeat. Over time, you'd get the benefits, in some kind of uneven way without overstretching your budget way too much. But it would be lovely to have a way to do this in a organized way locally.

    1. Hey there, Revanche!

      We had some similar things when I was very young, with the handful of Filipino families my mom made friends with. I think it's somewhat more common with immigrants, perhaps?

      I can see this working in an informal way since people are willing to put in the labor for people they know. It's harder with strangers.

      Maybe this could be a thing that works with existing neighbor groups, like NextDoor, or just Facebook.

  3. I don't have a driving licence... Back when I was single and lived in the US I used to walk or take the bus to the store and buy what I could carry. I saved lots of money on not having a car even if I maybe spent a bit more on groceries. Of course, I picked a place to live based on accessibility to stores and public transport. Now, if I go shopping on my own (my wife drives) for example after our new baby was just born, if there is too much to take on the bus I get a taxi or Uber home with all the stuff... If I could drive, likely we'd own two cars instead of just one (2004 model).

    1. Good point about avoiding car costs to offset groceries, mOOm.

      We are a none car household, too (2006 Toyota, so you have us beatby a couple years). We may go to two someday, but I am resisting.

      I may write a separate post on just transportation. The US makes it hard on no car families.

  4. I love the social consideration you made - it's so true. I love your pure heart. I do.

    1. Well that just made my day, Sarah. You are just too kind. It's always great to hear from you. How are things going?

  5. I live in a 55+ community and Costco is 25 minutes up the highway so some people carpool every two weeks or so which is great especially for those who can't drive anymore. And they get out of the house and probably get lunch too.

    I went to Costco with my coworker once and I had to carry the giant package of toilet paper on my lap because she drives a 2 seater Miata. :D

    1. I love the idea of a carpool to Costco, Daizy. Seems like a way to get two birds with one stone there.

      But yeah, trying to get those big packages into a Miata sounds tricky. :)

  6. I see this from two different lenses. First, the cost per ounce. From a pure financial standpoint, it absolutely makes sense. But sometimes, it is not necessary to buy in bulk. We buy TP, Paper Towels, and dishwasher soap in bulk. Otherwise, we just buy the cheapest option at Target or the sale price at that time to avoid storing large amounts. The cost savings per ounce or sq. ft. may not justify the prepayment. Second, sometimes, bulk buying can force you to buy things you aren't planning on buying because of a perceived deal. You don't fall into this category, but a lot of people do.

    I like your idea of crowdsource. In my head, I picture it like a go fund me page. For instance, a pallet of beans are stored in a warehouse until someone purchases all cans online. Once the pallet is paid for, the company warehousing them will split it up into a package and it can be picked up by the paying party. I love it though!

    Thanks for the great read.


    1. That's a good call out on not always buying in bulk, Bert. I certainly don't always do it. In fact, that's one reason I don't shop at Costco: often the price per unit is not good at all, and the large quantity just exacerbates the situation. It's a mediocre deal that you have to buy a lot of.

      Something like the 'full pallet' is a fantastic mechanism to make sure the store is getting a good value on this system as well. I think you're on to something there.

  7. Yep, the people who most need bulk buys/long-lasting items are the ones who can't afford to invest in extra or in high-quality (with the accompanying price tag) items. It's a nasty cycle that perpetuates poverty. Heck, they may have to buy the smallest package of whatever product it is, even if the per-unit cost is more.

    I try to remember this when I'm able to stock up on, say, 6-9 months' worth of toilet paper at a time. But honestly I forget a lot just how privileged I am to be able to do this sort of stuff. So thank you for the reminder!

    1. Hi there, Abby! I was thinking about the tiny pack of toilet paper when reading this: the little four pack that is so pricy per unit, and isn't even a qualilty product, either. It's so expensive to be poor.