That’s common sense. Every urban or rural housewife knows that buying in bulk saves you money.
But the problem is that it is not very convenient to buy a truck load of biscuits! Buying in bulk always may not save money. Usually our tendency is to dump random items even if we do not require them. That’s what Ashutosh, a Supply Chain Consultant warns.
I connected to Ashutosh Tewari, (Blog)who works as a Supply Chain Consultant in Mumbai, and is into Procurement Consulting. I have his permission to make our interesting discussion public. Here it goes.
me: hey, Ashutosh. a SCM question.
9:52 PM
What’s the distribution cost of a FMCG product
me: And how much a customer can save by bulk buying?
9:53 PM
ashtew: Distribution Cost will involve transportation & logistics
me: from the Big Bazaar, for example. Or from the factory itself.
ashtew: which in FMCG cos. is usually 3 phased.
Most FMCG cos. in india have outsourced the production to 3rd party.
ashtew: so its from manufacturer to company warehouse to distribution centre to retailer
9:55 PM
me: so what if i buy from the manufacturer? how much I save? as a thumb rule.
ashtew: there u need volumes… are u ready to buy a truckload of biscuits 
9:56 PM
me: let’s say I bring 1000 people who want biscuits! 
9:57 PM
ashtew: usually the manufacturer to MRP margin will be around 20-25% max
if u can bring a 1000 ppl then u can directly get in touch with the vendor and order from him 
ashtew: buying in bulk always may not save money… usually our tendency is to dump random items even if we do not require them…
like my mom once purchased a one liter bottle of dettol because it was on 20% discount
10:03 PM
me: my proposition is that you can save 60% in a group insurance scheme!!
10:04 PM
ashtew: thats interesting
which insurance product are u talking of ?
10:05 PM
me: group term insurance
10:07 PM
ashtew: but thats only at an organization level. right?
10:08 PM
me: no, any association can do that. I am thinking of doing it under an association.
10:10 PM
ashtew: thats interesting. never knew something like this can be done.
me: Thanks Ashutosh. Wait for an announcement shortly.
You may not be aware if something similar could be done for financial products. However, there will be different set of issues to ponder when it comes to financial products. We are addressing that right now.
Would you be interested in buying financial products in a bulk and save huge distribution costs? Stay tuned for an announcement shortly.
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Thanks Ranjan for tagging me in the post
I surely will be interested in understanding any product that can offer value. The insurance industry in India off late has unfortunately stopped doing so. There is ample scope to reduce Distribution/SGNA/Other cost and the savings thus obtained can be passed to the end customer. It will be a win-win situation for all if instead of focusing on increasing advertising spend and pushing ULIPs, if they focus on product and process innovation.
Also, as we were discussing, if something is possible from the customer end that will be a huge plus. This will be a breakthrough and will help take this market to the next level of maturity.
Regards
Ashutosh
Guys here is the solution to problems associated with bulk buying. We have a website http://www.bulkbargain.in in which members from all over India join the group with common cause of buying similar item and force sellers to quote their lowest. Hope you like it.
Regards