• How to Organize and Host a Group Buy

    Many years ago on a forum far away, I came across an opportunity to purchase a cleaning magnet for my glass tank at a great price. The magnet was expensive, retailing at $59 plus shipping. However, a single individual decided to pool many orders into one, get a great price from the vendor and in turn we each saved money. He too got his magnet at the discounted price, but he had to do a lot more work than the rest of us. It was called a Group Buy. Many people jumped at the chance to purchase said magnets, which all went to a single location. He distributed them to each participant. It was amazing to me at that time.

    Group Buys benefit the vendor because they can sell a lot of items in a single transaction, but their profit margin drops. The buyers benefit because their items cost less and often shipping is less because the order is large enough to waive those fees, or because everyone pays a share of the shipping. Such buys are hugely popular in local clubs where people meet together monthly and can pick up their goods at the meeting.

    The purpose of this article is to help familiarize each reader with the process, ways to avoid issues, and to point out areas of risk. For example, when I hosted the famous PAR meter group buy in 2008, 168 people across the nation (as well as outside our country) jumped at the chance. That total order was over $25,000 and I didnít want to be the guy in charge of that much money, even if I was only holding it briefly. With that particular GB, I had each customer pay the company directly since that protected me from any possible accusations later.

    Generally, this is the process I follow when hosting a Group Buy. I pick a particular vendor and check to see if they stock the items I desire as well as their pricing. If I expect a large group of people to be interested, Iíll contact the vendor to see if they are interested in taking on a large order and if we might be eligible for a discount. The key is to get as many facts as possible first. Armed with that knowledge, I can post on our local forum and ask if anyone is interested in joining in a GB for said product from that vendor. To avoid a drawn-out process, it is best to set a conclusion date so everyone knows how long the window of opportunity is open. As people sign up, keep a detailed list, and update the thread regularly so people know what is happening.

    The most popular GB I organize is for Keys Critters out of Florida. Iíve been ordering large groups of clean up crew critters from that company year after year. After getting the current price list from company, Iíll post the list and any requirements by the vendor. This one sells in bulk, so snails and hermits are sold in lots of 50 or 100 (or more). If someone has a nano and needs 6 snails and 5 hermits, they arenít able to participate. However if they want to divvy up that bag of 50 with a few buddies, thatíll work. Thatís not the job of the organizer; he sets the rules and guidelines, and everyone needs to do their best to cooperate with his direction. The organizer is the contact person for the entire process from beginning to the conclusion; the buyers should not contact the vendor personally because this tends to create confusion and sometimes chaos. (Double checking that the organizer is in fact running a GB with the vendor may be necessary, and someone may be assigned to verify this to protect the buyers.)

    Once the order has been compiled, totals need to be determined. Each person needs to pay their share including any shipping to the organizer or to the vendor directly; this should be clearly stated at the inception of the group buy. Once peoplesí money is involved, things can get harried quickly. Everyone needs to pay so the order can be placed in a timely fashion (by the deadline given), and then the organizer notifies everyone in the GB when the order has been placed. He should then continue to update with any news, such as if unexpected delays occur, items are out of stock currently, or if the shipment has been made with the anticipated date of arrival.

    Once the package(s) arrive, I open them up for a full inventory to make sure nothing is missing, and notify all the participants that their items are ready for pickup. Usually, people are quick to show up, and sometimes one person will be assigned the job of picking up a few orders if a cluster of buyers live far away. In that specific case, each buyer should notify the organizer of whom specifically will be picking up their goods, which avoids problems later.

    The organizerís job is to facilitate the entire process, including contacting the vendor if there are any special requests or if an issue arises. If something is missing, thatís simple. If someoneís livestock dies, that can be tricky because it calls into question how the livestock arrived, how it was handled, how long did it take to get to the actual buyer, and how was it acclimated.

    There is an element of risk when joining a Group Buy. The organizer could steal your money. The product may not arrive as promised. The livestock may be missing, substituted, or dead. If this is extra money you wonít miss, go for it! hehe If you are uncomfortable with such risks, donít get involved in a GB, and simply order directly from your vendor of choice. If something goes wrong, you can take up the problem with the vendor directly to seek resolution or restitution.

    Usually, GBs go well if everyone plays nicely together. My club has a set of rules in place to help protect the membership from abuse, and a huge list of guidelines for both the organizer as well as the buyers. My advice is to only do one with people you know and trust, at least for your very first one. If you donít trust anyone but yourself, you might need to be the host.

    The organizer really needs to be a person with a good reputation in the club, and they need to be an upstanding citizen in their community. We have had some pretty dicey GBs in the past that caused some major apprehension by the buyers when they saw the condition of the organizer's decrepit rental property and after getting a few too many excuses about various issues ('I've had some recent banking problems so payment can't be made until next Monday', 'I couldn't get away from work to receive the package', 'the shipment is going to be a few days later than expected', ... ). It may seem harsh but I'd rather have a member of the club's Board of Directors handle the GB and my money rather than a good ol' boy that is collecting our cash to pay his past due rent. If they seem well off and their reef looks great, I tend to trust them more than I would a poorer hobbyist - but that's just me. So far, I've never been ripped off in a GB, so I'd say the standards I'm holding those organizers to has been a wise decision. Find out about the person from others, and if as a group you trust him, proceed.

    Prior to placing an order, the organizer should ask the vendor what their warranty procedure is or what guarantees they make about possible losses. Itís best to do business with reputable companies rather than some new guy. Our club doesnít allow Group Buys with un-named sources; if itís a secret, this usually means someone else is going to benefit in the long run. Be very wary of a new company, because unfortunately some will make a few people happy at first to get some glowing reviews only to rip off others when major dollars are involved. People are getting used to online purchasing more and more, but thereís a reason why each person should continue to be careful. For example, if you order from some diver in Hawaii, sure youíll get fish dirt cheap. Shipping will be astronomical, but if enough people share that expense, everyone saves money. However, when some of those fish arrive dead, what can you do? Do you expect him to dive down for replacement fish, and are you prepared to pay more shipping? If you order livestock from a reputable livestock vendor, credits are often issued which can be used with future orders at a later date. Or perhaps that vendor offers to replace it if their terms were met. Vendors know that losses occur and have set up their business model to deal with specific circumstances.

    One more risk that I dare not neglect to mention: Never order livestock with a Friday delivery date. Invariably, Fedex or UPS will have a hiccup and that order will sit on a loading dock until Monday. They wonít rush it out on Saturday because Saturday Deliveries are actually an extra charge. To those companies, itís yet another box and can wait. They donít know your animals can only breath a fixed amount of time, and thatís not even considering extreme heat or cold while the box waits for the next delivery opportunity. In most cases, if it doesnít show up on time and you canít track it down that very day, odds are that everything will perish. Occasionally with a lot of phone calls, you can get lucky, but if it shipped to the wrong state (yes, this happens), your luck has run out. If a box is missing, the vendor should be contacted as soon as possible.

    Treat others the way you want to be treated. I would say this is important on every level of a Group Buy. Treat the vendor with respect, asking questions nicely and avoid making any kind of demands. Absolutely never ever threaten a vendor with some type of possible sanctions if they wonít offer your group a deal. ďOur club has 500 people and if you say no, you can bet not one of our members will ever spend a dollar with your company!Ē That kind of damage is not quickly forgotten, and club directors spend months trying to repair relations because some hothead member thought he was doing his club a favor. Treat each buyer with respect, answering their questions honestly or let them know youíll get an answer as soon as possible. Each buyer should respect the organizer, being sure to regularly follow up on the GB thread to know the latest. They should be prepared to pay at the specified time, and be sure to show up on the arrival date to pick up their goods. The organizer shouldnít have to track the buyers down, especially if livestock is involved. Every person should subscribe to the thread, logging back on for all updates and be responsive to do their part. If everyone works together like a team, everyone wins.

    Here are some screen shots of a very recent group buy on DFWMAS. The initial post provides all the information that people would need to decide if they want to participate.

    It doesn't take long if the items are popular.

    If corrections are necessary, update the original post and also add a new entry so it won't be overlooked.

    As the order comes together, a spreadsheet is ideal. Posting that spreadsheet allows the buyers to make sure you got it right.

    I like to update the first post in the GB thread with all the buyers and what they are ordering. If they've paid, that is marked clearly by their name.

    When important updates are necessary, these are inserted at the very top of the first post. Our software allows the use of larger fonts to hopefully get everyone's attention.

    And once the ordering period closes, it is time to do more number crunching to get everything tallied up, determine what each person owes, and this too is posted in the thread. This post explains how to make payment.

    Here's a link to an easier-to-read spreadsheet screenshot: http://melevsreef.com/pics/10/06/kc_gb_final.jpg

    Communicate with the participants with any updates. Even if it a simple thank you and a little news.

    Once everyone has made payment, I proceed to pay the vendor for our order. This particular order includes over 1300 critters. We've had orders in the past that were much larger. It was actually so large that the vendor had to spend one full day collecting just for our group - after that one, they instituted some new policies to make sure the process wouldn't shut them down like that again. We as a group had no idea what the vendor's situation was, nor if it was a big deal or a typical day at the office. Fortunately for us, it didn't burn that bridge and we've continued to do Group Buys with them about twice a year ever since.

    If your club is really big or covers a wide territory, it may be best to have one person organize it so shipments are made to two or three different locations to ease the commute. Alternately, the group to the east might order this week, and two weeks later the group to the west gets their order. Think it through, always trying to be reasonable so that everyone can participate without regrets.

    Now in the case of my orders with Keys Critters, they have a very specific method of shipment. It always ships out on a Wednesday for a Thursday delivery. Even though I'm home during the day time, I won't risk the livestock by waiting for the driver to eventually get to my door - which could be anywhere between 3 p.m. and 8 p.m. When weather is hot (Summers in Texas are rough), the livestock would be sitting in a hot truck all day long. Instead, I always have it shipped to the closest Fedex store. What happens is Fedex will send it to the store by 9 a.m. and I'm able to simply drive over and pick it up. Here's an example address from a previous order:

    C/O Marc Levenson (melevsreef)
    4485 Bryant Irvin Road
    Fort Worth, Tx 76132

    That phone number is mine, which Kinko's can use to contact me when the package arrives. Once the order has shipped, Keys Critters emails me the tracking numbers and I'll update the thread again. I'll check on the progress of the packages until the morning arrival, then pick them up and bring them home.

    The day of the shipment, everyone is updated with my contact information and location.

    Each box is carefully opened, and I then go through all the items to make sure nothing was omitted.

    This vendor does have some items bagged individually, and some items are in bulk. When in bulk, I get the job of counting them out and rebagging. KC included bags and rubberbands - which is a nice bonus and certainly a courtesy on their part.

    Sorting all the items into individual orders, they are placed in supermarket bags. As each buyer shows up, confusion is kept to a minimum.

    The bag is then marked with the buyer's name with a Sharpie marker, and put back in the cooler until they arrive to pick it up. If there are any refunds for the buyer or if any funds are still owed, that is taken care of on the spot. I remind buyers to bring an ice chest or cooler with them so their critters won't be adversely affected by temperature variance during their trip home.

    Lastly, if the vendor (like Keys Critters) has a specific acclimation procedure, buyers should each be informed how to do so before they leave. Posting those recommendations in the thread is a great idea (as seen in a previous image above), but some hobbyists are stubborn and think they know it already. They must be told what to do for the survival of the livestock, and to avoid any problems later between the vendor and any disgruntled participants. Seriously, don't assume anything ever. Just spell it out, do your job, and everything should go well.

    Additional Reading
    DFWMAS Group Buy Forum Rules: http://www.dfwmas.org/Forums/viewtopic.php?f=13&t=65583
    DFWMAS Group Buy Best Practices: http://www.dfwmas.org/Forums/viewtopic.php?f=13&t=18167
    Comments 3 Comments
    1. Snakebyt's Avatar
      Snakebyt -
      great write up, and alot of great tips ... thanks for sharing
    1. melev's Avatar
      melev -
      More images have been added to the article to show the receiving day.
    1. Ownzordage's Avatar
      Ownzordage -
      Great article! Whats the trick for paypal premium accounts to avoid the fees? It was mentioned in a screenshot.