The following 101, on how to start a buying club, comes from the lovely and visionary Amy McCann, CEO and founder of Local Food Marketplace. Although Amy is partial to Local Food (read more about them at the end of this 101), she’s the first to encourage folks to find their own solutions that suit their needs. Her outline below will help you think through your own food-buying cooperative and, hopefully, get your creative juices flowing (not to mention your taste buds). Thanks so much, Amy, and please keep the good ideas cooking!
A buying club is a group of people who pool their buying power—and their labor and skills—to buy food and other products in bulk.
To put it another way, most folks buy their food from a grocery store, a farmers market, or perhaps directly from a farmer by subscribing to a CSA. In contrast, buying club members purchase collectively, as if they were a single large buyer—sort of like a supermarket. They also take on tasks traditionally carried out by a retailer or producer, such as ordering from the distributor or farmers, processing orders, collecting payment from individual members, and organizing distribution.
One benefit of a buying club is that the costs associated with purchasing from a retail store are reduced or eliminated, which means you often can get the same products at a lower price. There can be social benefits to participating, as well, such as getting to know like-minded community members you might not meet otherwise. Plus, if your club buys directly from a farm, you’ll have the chance to develop a relationship with the farmer who grew or raised your food.
SO, WHAT’S THE CATCH?
Who wouldn’t love to meet more people in their community and get products they already buy at a lower price?
Buying clubs aren’t for everyone, and lower prices come at a cost: in reduced convenience, increased effort, and possibly less selection. Buying clubs typically operate on a schedule—quarterly, monthly, and weekly are common—and have order deadlines and specific distribution windows.
They also require members or managers to perform tasks usually handled by a professional retailer. The buying club also needs to meet order minimums and purchase in wholesale quantities, which means members may have to compromise on the products they choose.
HOW DO I GET STARTED?
1. Take stock of the landscape. This probably goes without saying,but you’ll want to make sure there’s enough demand for a buying club in your area—and find out if one is already up and running. Why reinvent the wheel?
Most buying clubs are managed through a Facebook group or page. Search for “Local Groups” under “Groups” in Facebook. Some buying clubs are listed on Local Harvest. You can find others through distributor websites (see number 7, below).
2. Learn the lingo. As you begin researching buying clubs, you’ll encounter some unfamiliar terms. A couple you should know:
• SPLITS: Distributors typically require a buying club to purchase full cases of products, but individual members may not need a full case of, say, garlic; hence, they “split” the case with other club members.
• ORDER MINIMUMS: Since you’ll be purchasing as if you were a wholesale buyer, you should expect to meet a minimum level for each product, as well as for your entire order.
3. Figure out what you want to buy. Do you want to buy staples, fresh fruits and veggies, raw milk, or household products (diapers, laundry detergent, etc.)? There are many different ways to source products for your buying club. Here are the most common:
• REGIONAL/NATIONAL DISTRIBUTOR: There are a number of regional and national distributors that offer buying club programs, including UNFI, Frontier Natural Products Co-op, Azure Standard, Organically Grown Company, and Frankferd Farms. Some may require a commercial loading dock for delivery, so be sure to look into each distributor’s requirements. Some even provide technology to help you set up your club, allowing members to place their orders easily.
• LOCAL DISTRIBUTION: If you want to source locally, there are a number of regional distributors that work with buying clubs, including Crown of Maine and Green Mountain Farm Direct in the Northeast, Eastern Carolina Organics in the Southeast, Co-op Partners Warehouse and Honored Prairie in the Midwest, LoCo Food Distribution in the Mountain West, and Hummingbird Wholesale in the Northwest. These typically offer a variety of products from multiple local producers.
• INDIVIDUAL FARMS: You might get lucky and find a farm near you that already works with buying clubs, but you may need to explain your concept and how it could work. Even if a local farm or regional distributor doesn’t have a buying club program, you might approach them and talk through what you want to do.
For any farmer or distributor not used to working with buying clubs, just be sure you and they understand how you’ll place your orders.
You’ll also want to make sure they understand that you’ll be aggregating all of the club’s orders to receive wholesale pricing. If they think you’ll be handing them a stack of individual orders to sort through, you won’t receive the best price, and they may turn you away.
4. Research licensing and logistics. Caution: States and local governments have different requirements for commerce and food sales.
In other words, you'll need to do double research on whether a business license is required for your buying club, what products can be bought and sold through your club, and whether a distributor’s semi-truck can deliver to your intended drop point. (Did I mention you’ll need to secure a drop point? More on that below.)
You’ll also want to think about tax implications for your buying club and its members. Some considerations:
• REGISTRATION AND LICENSING: Some local governments classify a buying club as a business that must pay registration fees and taxes. Your state’s secretary of state website is a good place to start.
• PRODUCT RESTRICTIONS: A buying club may give you access to products not usually available to the public. While selling raw milk is prohibited in many states, some buying clubs purchase herdshares from local dairy farms—effectively, owning the cow—in order to get around this restriction. (Learn more in the Buying a Whole Pig 101.)
Learn about restrictions on your state’s department of agriculture website. (Check the Find Good Food page for links.) Your local Weston A Price chapter and the Farm to Consumer Legal Defense Fund are also good resources on how to legally purchase restricted products.
• LOGISTICS: You’ll want to research restrictions on commercial traffic at your desired drop point—that is, where the truck will drop off your order and whether or not you'll need a loading dock. You'll also want to think about whether you’ll need refrigeration or freezer space to store products before members pick them up. For smaller clubs, homes, schools, and places of worship are common drop-off/pickup points.
• TAX IMPLICATIONS: Since you’ll be purchasing as a wholesale buyer, your club likely won’t be charged tax. So, buying club members will need to individually remit local and state sales tax on any taxable products—including food, in some regions. Your club membership agreement should cover this, among other individual responsibilities.
5. Gauge interest. When looking for potential club members, start with your own network. If you can't convince your friends, you might need to work on your pitch.
You’ll want to understand how seriously interested each person is, what products they want to buy, how much and how often they want to buy those products, and any relevant skills they can contribute. You should be prepared to explain what a buying club is and provide a rough idea of expectations for members. If you encounter differences of opinion or priorities, be flexible but realistic.
6. Recruit cofounders. Unless you want do to do all of the work yourself or you plan to make the club a mini business, you’ll want some help getting started. Look for cofounders with experience in finance and bookkeeping, marketing and communication, order processing and distribution, even software and web development.
7. Research technological support. No matter how big or small your buying club is, what distributors and producers you buy from, and how advanced your distribution process is, most buying clubs benefit from the use of shared technology. Many clubs use Google Drive to manage orders. This is a good way to get started because it’s free, but established buying clubs often find that a more robust system takes up less valuable volunteer time.
There are a handful of web-based systems out there, including Foodclub, Wholeshare, Buying Club Software, and Harvest to Market. For more sophisticated buying clubs that operate as businesses, with multiple distribution locations and producers, Local Food Marketplace (my baby!) and Locally Grown are good options.
8. Get the details right. A buying club's ultimate success or failure comes down to the details, so you want to build a foundation for long-term success. Consult legal and accounting professionals to ensure you comply with local and federal laws and tax-reporting requirements. In addition to a membership agreement, many buying clubs also have a handbook covering how decisions are made and other procedures.
9. Have fun! Getting a buying club up and running is a lot of work, but before long it will mean delicious, local food on your table and a solid community of eaters near you who value the same. Many buying clubs even organize potlucks, film screenings, and other events to help foster this sense of fellowship—and to just plain have a good time.
Got a question for Amy? Or have you started your own buying club and have a tip to share? Post your comments below and keep the conversation rolling!
You might also be interested in 101s on community building, starting a food recovery program, bartering, finding farm apprenticeships, starting a CSA (even if you don’t have a farm), gardening with kids, installing a neighborhood-friendly posting post, hosting a food swap, agritourism, and an in-progress 101 on starting a food co-op—similar to a buying club but with a physical store.
You can identify local farmers and other providers near you using HOMEGROWN’s Find Good Food and Find Good Food by State pages, and you can always find more things to make, craft, cook, preserve, plant, grow, and start in the HOMEGROWN 101 Library.
More about LFM: Local Food Marketplace provides technology and services for food hubs, co-ops, buying clubs, and online markets that aggregate, sell, and distribute local food. LFM currently supports more than 70 customers across the United States and Canada, including Harvest Moon Buying Club, Lake Co-op, and Bountiful Sprout.
ALL PHOTOS COURTESY OF FLICKR CREATIVE COMMONS (EXCEPT FOR AMY'S HEADSHOT, COURTESY OF AMY McCANN): (CO-OP) UMSU UNIVERSITY OF MELBOURNE; (SIGNUP) ANNE WHITE; (PICKUP) SARAH GILBERT; (GREENS AND CHIVES) ANNE WHITE; (SCALLIONS) WIKIOTICSLAN; (PRODUCT CODES) NICOLE; (TOMATOES) DENISE KREBS; (MEAT) TERRIE SCHWEITZER; (TRUCK) AMY BRADSTREET; (MEETING) FORT GREENE FOCUS; (DAIRY) JULI; (CAR) KIRSTEN SKILES; (POSTER) BORIS MANN; (FRIENDS AT TABLE) MELISSA SCHAEFER; (ORDER) TERRIE SCHWEITZER; (ADZUKI) ANNE WHITE; (BOXES) ANNE WHITE
Thanks for sharing this detailed guide about buying and selling food with proper legislation. But my question is about the marketing of our company and product etc. How we would convince the people that we are selling the finest products. Usually, people search your business online to check reviews about the business. Do you think, we should also list our business to good review places?
On the other hand, do we need both buying and selling rights in this regard?