How to Choose a Buying Club

When you hear the phrase "buying club," most likely you think of Sam's Club, Costco, or BJ's. These warehouses require their customers to purchase a membership each year in order to enjoy savings on everyday items such as food and clothing, as well as on larger items like wide screen televisions and furniture.

The force behind these buying clubs? Group buying power. But how does it work?

Picture, if you will, a car dealership. When one person walks in off of the street and sits down with a member of the sales team, he or she will do their best to get their best price on the car they want. And they may be able to get a pretty good deal. But not nearly as good as the owner of a rental car business wanting to buy a fleet of vehicles.

That is how group buying power works--you are not a lone consumer. You are a member of the larger group, and therefore qualify for the same kinds of low prices that a major volume purchaser does.

So what kinds of buying clubs are there and how do you choose? Well, it depends on the kinds of buying you do on a regular basis, and what kinds of special purchases you have planned for the future.

Sam's Club, BJ's, and Costco are all fine for bulk food and other items. But you wouldn't want to buy furniture from them most of the time (occasionally they do have something nice, afterall). That is why there are buying clubs that are designed specifically for big ticket items.

One of those clubs is Direct Buy. Direct Buy is a buying club that allows its members to access hundreds of manufacturers, mostly through catalogs, on items such as high-end appliances, kitchen cabinetry and flooring. They have fancy tv and radio ads that boast the lowest prices around.

If you are already a member, that is fine, but I don't recommend them for several reasons. For one thing, they do not actually have direct pricing as is their most popular claim. I will not go into all of the reasons in this lesson, however you may find the article, The Top 5 Reasons NOT to Join Direct Buy rather interesting.

No, if you want to join a buying club for your major purchases, the first thing you must realize is that you will be making an investment in the membership. This decision will impact you and your family for many years.

As with all investments, you want to do your homework. No gimmicks here. After all, you will be using your PLAN account , so this should not be taken lightly.

To maximize your investment and therefore your savings over a long period of time, look for a membership that covers multiple generations of your family. That way, your parents, children, and grandchildren will be able to benefit from the savings being offered.

Also, try to avoid companies that charge a yearly renewal fee. Not only is a one-time outlay of cash more affordable, but you will also be able to feel good about your decision without experiencing remorse each year.

A company that allows members to be "grand-fathered" in to new benefits is best. Otherwise, as the company grows and more savings are offered, you might find that you are asked to pay more to use them. You want to go in knowing that the value of your membership will grow along with the size of the group instead.

Obviously, the group must be able to offer real savings, like buying furniture direct, purchasing automobiles at fleet pricing through affiliate dealers, and even getting cash back for shopping online.

Last but not least, they should have a way of allowing local businesses to participate. I am a strong advocate for preserving Main Street, and this kind of mutually beneficial arrangement would protect small and medium-sized businesses.

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