As a bulk olive oil supplier to manufacturers, we work closely guiding many small businesses. Their goal is usually the same: by transitioning from smaller purchases to bulk, they hope to save money and support their bottom line.
While there are many benefits to making this change, there are also inherent challenges that many business owners don’t really know when they start evaluating.To save business owners some time, we’ll review the ways that switching to bulk purchasing can help (and hurt!) your small business.
By purchasing in bulk, you can reduce your cost by eliminating packaging and receiving volume discounts. Because of the high cost of shipping, it is necessary to buy in full pallets to make savings outweigh the additional shipping costs.
Requires Proper Storage Space
When you buy in bulk, your olive oil delivers on a pallet. This is a 40” x 48” or 48” x 48” platform that olive oil containers are packed onto, usually reaching 4-5 feet in height. This amount of olive oil will need to be stored somewhere in your facility, preferably in a cool and dry place. Keep in mind how you’re going to move the pallet from where it is delivered outside to it’s final storage spot (especially if it’s a larger size like a tote or drum that weighs 500-2500 pounds).
Ties Up Financial Capital
When small businesses buy in bulk, the minimum order (which is one pallet) will usually last 4 - 7 months. Pallet orders can cost anywhere between $2,000-$5,000 depending on the grade. For small businesses with limited funds, this means that the inventory you’re storing for months is tying up the limited financial capital available. This is money that may need to go towards accounts payable, payroll, or other ingredient purchases that make your business viable.
Even though you’re supporting your bottom line by saving on ingredients, the extra storage space and funds required don’t always make bulk purchases the optimal choice for a small business. Think about how bulk purchases could affect your business-- good and bad-- before making the switch.
Need help making the transition to bulk? Download the Small Business Guide To Buying Olive Oil, which will walk you through the most important things you need to know.
Topics: Small Businesses Advice