Buying group
Also called purchasing group
Reviewed by Dasha ShakovVP Marketing, Proton
Updated
What is buying group?
A buying group is an organization that negotiates prices, rebates and programs with manufacturers on behalf of many independent distributors. Each member gets the purchasing power of a much larger company while still running its own business and buying and selling independently.
How it works
Much of a buying group’s value arrives as rebates, paid to members according to how much they buy from the group’s preferred suppliers, which is one reason a distributor may steer customers toward certain brands. Many groups also offer shared marketing, data, insurance or technology programs. A buying group’s members are distributors, whereas a GPO’s members are the organizations that use the products.
Buying group example
Two brands of safety glasses cost the distributor the same. Its purchasing manager picks the buying group’s preferred supplier, because those purchases count toward the year-end rebate.
Related terms
- Cooperative (co-op)A cooperative (co-op) is a buying organization owned by its members, typically independent distributors or retailers, who pool purchasing for better terms.
- Group purchasing organization (GPO)A group purchasing organization (GPO) is an organization that negotiates supply contracts for members that buy and use the products, such as hospitals.
- RebateA rebate is money paid back to a buyer after a purchase, once the buyer reaches agreed volume or growth targets over a period.
- SupplierA supplier is any business that provides products or services to another business.
