What Is A Buying Group, And Is It Right For Your Company?

May 21, 2021 by NetPlus Alliance

Doing business in today’s market can feel overwhelming and impossible at times. From connecting with new suppliers to finding the best ways to succeed with your customer base, there’s a lot to focus on.

For many independent distributors, the secret to their success lies not only in their business model but also in their buying group. Industrial buying groups allow distributors to negotiate better prices, improve their bottom line, and grow. 

Would joining a buying group be a good move for your business? Learn more about buying groups, the benefits, and what NetPlus Alliance has to offer independent distributors.

What is A Buying Group?

In the industrial world, a buying group is a group of independent distributors and suppliers that join together. A buying group can negotiate better deals, set up training programs, and do so more affordably as a group than they are able to as individual companies.

Though these companies are part of the same organization, they remain independent. Depending on the buying group, there may be specific requirements for how they negotiate, pay invoices, or handle other aspects of their business. 

There are different types of buying groups, so distributors should find a buying group that best fits their company values and business goals.

The Benefits of A Buying Group

The primary draw of buying groups for many distributors is the stronger negotiating pull you’ll have. However, that is just one of the many benefits of a buying group.

To determine if an industrial buying group is the right move for your business, learn more about the potential benefits and which benefits matter most.

More Members, Better Negotiations

Improving profitability and finding ways to improve market value is a crucial goal for many companies. However, independent distributors of all sizes can have difficulty cultivating the relationships or meeting the purchasing thresholds necessary to get the best deals from suppliers.

By working with a buying group, the overall organization negotiates deals that help distributors get better prices, while suppliers reach more of their target market. Buying groups work to create business deals for both distributors and suppliers, which gives everyone options for lower-cost lines and better business outcomes.

The ability for independent distributors to be able to open orders at lower minimums and have better pricing options, while also improving payment terms, is a remarkable part of joining a buying group. 

Lessons For Better Business

Another benefit of working with a buying group as a distributor is the knowledge shared throughout the network of suppliers and distributor members.

Buying groups often request that members follow specific best practices when doing business with networked suppliers; these practices often teach distributors new ways to do business that really pay off long term. 

Additionally, many buying groups offer competitive, joint sales planning. Our program, Growth Plus, allows our distributors and suppliers to target the channel partners they want to grow with. They then collaborate to build a plan for growth, leveraging our outlined process. 

Predetermined Programs

Buying groups have close relations with their suppliers, and they work with these suppliers to set up programs for group members. These programs are often not offered directly by suppliers to independent distributors because of the cost required to run the programs. 

However, suppliers are willing to set these programs up with a collective organization to improve their supply line through many distributors. These incentive programs may be rebate programs, training programs, or new line previews.

Regardless of the program type, the buying group works to negotiate the program’s availability for members. Members simply need to take advantage of the opportunity they likely would not have without the buying group.

Expand Your Network

Are you interested in expanding to new suppliers but find that the route to connect with them can be difficult?

Working with a buying group can help to improve that networking challenge. Through programs, meetings, and dedicated representatives, distributors connect with new suppliers once they are part of the buying group.

At NetPlus Alliance, we ensure that distributors have as many opportunities as possible to partner with new and existing suppliers. Our preferred suppliers often meet with distributors at face-to-face events like our Annual Meeting. We have kept up with these events virtually to continue the work during unprecedented market changes.

Specialized Product Training

Many buying groups can set up more detailed and thorough product trainings. These trainings allow distributors to learn about new lines directly from the suppliers. This information enables sales teams to be more effective as they market to the consumer base. 

While this type of product training might be hard to coordinate as an independent distributor, buying groups leverage these with suppliers.

Why Should I Join A Buying Group?

Now that you know more about the benefits of a buying group, are there any that stand out as something your business has been lacking? 

Consider joining a buying group if one or more of the following statements rings true:

  • My business is ready to add new lines and I’m interested in meeting new suppliers.
  • We could benefit from expanded training programs, but we don’t have the resources to develop them from scratch.
  • I’m interested in taking advantage of rebate programs and getting better deals from suppliers.
  • Connecting with a network of experienced distributors, suppliers, and industry leaders sounds appealing.

Most independent distributors that are ready to improve their profit margins and make more of their business will find great benefits in buying groups. Still, it’s essential to make sure that the goals of a buying group line up with your business goals before committing. 

Get to Know NetPlus Alliance

NetPlus Alliance was founded on basic principles:

  1. Keep it simple.
  2. Keep it cost-effective.
  3. Make sure it’s beneficial for the member’s business.

We have created a powerful buying group so that all members can grow through collective resources. Through membership with NetPlus Alliance, independent distributors gain access to yearly rebates from our preferred suppliers, better networking connections for new lines and product categories, and a variety of training resources.

NetPlus Alliance works with distributors of all sizes from many categories and we do not require specific invoicing methods, shared financials, or other restraining commitments to attain membership.

Our rebate program gives members annual rewards based on their involvement with suppliers and in the buying group. In addition to these rebates, distributors receive great pricing negotiated by NetPlus for the entire group. Suppliers provide these prices and rebates as they see volume increases through our program.

NetPlus Alliance Buying Group FAQs:

How can a distributor join NetPlus Alliance?

To join NetPlus Alliance, fill out a consultation form. Once the form is submitted, a team member will contact you if they think you will be the right fit. 

What type of suppliers are part of NetPlus?

NetPlus has over 180 manufacturers, wholesalers, and business service suppliers representing nearly 600 well-known brands.

Does NetPlus only work with industrial distributors?

No, we work with a wide range of distributors. The majority of our distributors fall into the following categories:

  • Industrial
  • MROP
  • Commercial construction
  • Residential construction
  • Oilfield, fasteners, safety, and welding verticals 

We also do not have a specific size requirement for our distributors, and current members range significantly in size. There are benefits for distributors of any size in the NetPlus program.

What should I know about the NetPlus rebate program?

After joining the NetPlus program, preferred suppliers are alerted that your membership in NetPlus is active. This immediately gives you access to applicable programs, prices, and other advantages. Once you join our group, you’ll be able to see the details of these programs on the NetPlus Member Portal.

Throughout the year, your rebates will be automatically calculated through reports from suppliers. During Q2 of the following year, distributors will receive their annual rebate check based on those sales reports. The rebate percentage received by each distributor depends on their engagement with the group’s programs. 

How can I learn more about NetPlus Alliance?

If you are ready to speak with someone or have more questions about NetPlus Alliance, contact the office by phone at (716) 438-2014 or message us online.

Topics: Industrial Buying Group, Contractor Supplies Buying Group, What is a buying group

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