Purchasing cooperatives, sometimes called shared services cooperatives, are owned by businesses or organizations that work together to meet common needs.
Members combine their buying power to purchase products, supplies, and services at lower costs. By working together, they can often get better pricing than they could on their own while remaining independent businesses.
Benefits of Purchasing Cooperatives
Members may benefit from:
- Lower costs through bulk purchasing
- Shared services such as IT, marketing, transportation, and payroll
- Access to insurance and financing options
- Reduced administrative work
- Opportunities to share knowledge and best practices with other members
Who Uses Purchasing Cooperatives?
Purchasing cooperatives are found in many industries, including:
- Hospitals and healthcare systems
- Independent retail businesses
- Farm supply and agricultural organizations
- Schools, colleges, and universities
These cooperatives help members operate more efficiently, improve access to products and services, and stay competitive in the marketplace.
Examples of Purchasing Cooperatives
Ace Hardware is one of the best-known purchasing cooperatives in the world. More than 5,000 stores operate under the Ace brand, and most are independently owned by local business owners. The cooperative began in 1924 when a group of hardware store owners joined together to buy products in bulk. By combining their purchasing power, they were able to lower costs and compete with larger retailers while maintaining local ownership.
Carpet One is the largest floor-covering purchasing cooperative in North America. It is owned by more than 1,000 independently owned flooring stores. By working together, member businesses gain greater buying power, access to marketing support, and the advantages of operating at a larger scale while remaining locally owned.
Rural Wisconsin Health Cooperative
The Rural Wisconsin Health Cooperative (RWHC) is owned by 40 rural Wisconsin hospitals. Members work together to share resources, reduce costs, and improve healthcare in their communities. RWHC also includes affiliate healthcare organizations that can participate in the network and collaborate with members.
National Co+op Grocers (NCG) is a cooperative that helps food co-ops across the United States work together. NCG supports 169 food co-ops that operate 241 stores in 40 states, serving more than 1.3 million member-owners and generating over $2.8 billion in annual sales. By working together through NCG, individual co-ops can get many of the benefits of a large grocery chain, such as stronger buying power, shared marketing, and operational support, while still remaining independently owned and locally controlled. NCG helps food co-ops save money, operate more effectively, and provide better value to their members and shoppers.
CESA Purchasing helps Wisconsin schools and other educational organizations save time and money. By working together, schools, libraries, colleges, universities, and nonprofits can get better prices on the products and services they need. The cooperative gives smaller schools the same buying advantages as larger districts, helping all members stretch their budgets further.
Resources
Succession Planning for Purchasing Co-op and Their Members. Project Equity, 2017.
A Guide for the Development of Purchasing Cooperatives. U.S. Department of Agriculture Rural Development, 2009.
Western Areas Cities and Counties Cooperative Case Study. Funded and prepared for USDA Fund for Rural America, 1998.
Basics of Organizing a Shared-Services Cooperatives. U.S. Department of Agriculture Rural Development, 1995.