Gaining buying clout

Dec 01, 1999 10:30 PM  By

`There’s strength in numbers” is much more than a saying to The Mark Group. Since April, the multititle mailer has cut its long-distance telephone costs 27% by joining other marketers in a buying consortium. “By combining the businesses of many companies, we could all get a better deal through volume,” says Seth Miller, executive vice president of the Boca Raton, FL-based cataloger.

Eighteen months ago, The Mark Group, which mails apparel catalogs Boston Proper and Mark, Fore, & Strike, and gifts title Charles Keath, turned to New York-based Retex to help it join a consortium. A not-for-profit agency founded in 1992 to negotiate on behalf of retailers, Retex acts as a matchmaker among marketers and helps negotiate volume discounts with vendors. Other companies in the consortium include clothing retailer The Gap and food merchant Trader Joe’s. While Retex negotiated the discount with long-distance telephone service provider MCI WorldCom on behalf of the group, each member signed its own contract with the carrier.

Sacrificing the direct relationship

Now Broomfield, CO-based cooperative database supplier Abacus Direct is jumping on the buying consortium bandwagon. In October, it began offering its 1,300 catalog members the opportunity to join buying groups to receive discounts on printing, corrugated packaging, and inbound telephone service. According to Daniel Snyder, president of Abacus’s international operations, within a month 10% of its members, or some 130 catalogers, had joined. Abacus members do not have to pay additional fees to participate.

Greg Harper, vice president at Abacus member Appleseed’s, says the women’s apparel cataloger is considering signing on with one of the buying consortia. He’s concerned, however, that any savings that Appleseed’s realizes in buying corrugated, for example, might be offset by the cost of shipping the packaging to the cataloger’s Beverly, MA, headquarters.

But other catalogers may not want to cede control of purchasing and negotiating to a group, nor lose the personal relationship with their suppliers. Ted Pamperin, chairman of American Catalog Partnerships, a catalog purchasing consultancy in Summit, NJ, says that when he tried over the years to establish a buying consortium, “we found that many catalog executives were against it because they no longer would have that direct relationship with the vendor.”