Cooperative (co-op)
Also called purchasing cooperative
Reviewed by Dasha ShakovVP Marketing, Proton
Updated
What is 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. Together they get prices and rebates from manufacturers that none could negotiate alone, and co-ops also commonly provide marketing programs, private-label products, training and networking.
How it works
A co-op is one kind of buying group. The difference is ownership: members own a co-op and share in its profits, often through year-end patronage dividends, while other buying groups are privately owned and charge members fees or keep part of the rebates.
Cooperative (co-op) example
After joining a co-op, an independent electrical distributor buys a major brand of wiring devices at the co-op’s negotiated cost and receives a share of the co-op’s year-end rebates and profits.
Related terms
- Buying groupA buying group is an organization that negotiates prices, rebates and programs with manufacturers on behalf of many independent distributors.
- 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.
- Private labelA private label is a product line made by a manufacturer but sold under the distributor’s own brand name.
