Chris Reddick (President and CEO of Clarity) and Ron Halversen (Vice-President of Sales and Marketing at Clarity) discuss custom pricing groups and lists for buying groups.

Part 1 of a 4-part series 

RON: Hey, Chris. Ron here. How you doing? 

CHRIS: Hi, Ron. Doing great. And, boy, this is a really cogent, on-point topic for buying groups today. We're going to be talking today about pricing groups and some of the benefits and capabilities within pricing groups.

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CHRIS: And Ron, I think this could be one of the most important, if not the most important for many folks' capabilities within a buying group, right? 

RON: Yeah, I totally agree with that. 

CHRIS: Ultimately, the summary here is—there's a lot of nuances to this—but essentially the purpose of a group purchasing organization or buying group—in addition to a lot of other capabilities around logistics and presenting value with the data itself, aggregating information across the industry, etc.—at the end of the day, the fundamental purpose is being able to purchase things at discount by buying them in a bulk quantity. 

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CHRIS: And this presents a win-win opportunity for the vendors, the distributors, the manufacturers, etc. So how do we present this to the buyers, to the members? And then how do we also make this presentation and this workflow optimized for your organization, so that you're not stuck in the middle dealing with a lot of logistics. A lot of buying groups have to do things manually in order to deal with the complexity, and but we want to talk about today are some of the areas that you can immediately take advantage of to enable self-service and really incentivize and create an upward spiral of activity within your buying group. 

So that's really the topic today. And just to start us out, Ron, I would love it if you would talk about the high-level concepts that we're going to go into and then we can start picking through those one by one. 

RON: Yeah, that sounds good. Thanks, Chris. One of the things I think you need to really start with is, what is a buying group and why do you have pricing groups in the first place? I mean, we already understand that buying groups is about getting a better deal. That's really why we do buying groups. Why do they have Sam's Clubs and Costcos and things like that is because people can go and buy in bulk. 

And if we have people buying in bulk and in large quantities, then Costco can go to the manufacturers and get a better deal and then they can sell in bulk. And it's a win-win for everybody, right? We get 27 bottles of ketchup at a time and a deal, and they get to get ketchup with a lot better deal, and Heinz can sell a lot more ketchup. I mean, it's a simple thing like that.

But if you think about it, as you owning the buying group buying platform how can your buyers benefit? Because if they benefit, they're going to come back and buy more from you. So really, you ultimately benefit. So: 1) how can they benefit? 2) How can your vendors benefit? 3) How can you benefit? 

If you think through all those different scenarios, that's what we're going to cover today. So, for example, with Costco, you have a membership or you don't. So you think, that's it. That's the only thing they can do. Lo and behold, I got marketed to a few years ago about an executive membership and an executive membership—and I don't remember Chris, is it 1% or 2% back, I can't remember. But instead of $55 a year, it cost me $110 a year. But we were buying a lot from Costco. So I upgraded to an executive membership, and you can imagine how many millions of users upgraded the executive membership. And so they immediately doubled for, all of those members, the annual fee just by offering this new thing so that's one option, right? 

So do we have different levels of pricing groups? Do we have different levels of quantity breaks that you might get on a product? If you order a thousand a month or sell a thousand a month, they're going to give you "X" price. But if you could sell more than a thousand a month do you get another 10% off? Great. How can we figure out how to give a little bit bigger discount or bundle those together so you can now make that additional discount.

So today we're going to dive into some of the things like logistics around discounts and promotions, discounts around grouping them into different roles. For example, resellers might come in and get a different price than a distributor might get a different price than a wholesaler. When they log in automatically, does the group buying platform know who they are and auto adjust the prices based on their role to create those different groups? Can we group things together and allow them to do things?

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RON: One of the last things that we talk about is lists. Do we make it easier for them to come back and buy from you, especially buying in bulk, than to go anywhere else? And I really want to cover that one because I think that one's a great one.

So first off, let's just go down through this first one. The better the deal in a buying group, the more they're going to buy, right? I mean, it's just a gut check there. Why do we buy 27 bottles of ketchup from Costco. We don't need that many, but the fact is, is they bundle it that way. I mean, every time I go in, I have to get ketchup. They're like, 64 ounces. They're huge. 64 bottles, and they're in a two-pack right. And you have to buy it that way. When you go buy a loaf of bread there, it's always two loaves. You can't buy a single loaf of bread there.

So the way they bundle things might cause them to buy more. The most important thing about this is to keep the accurate inventory. And we're going to go into this quite heavily because of the supply chain and the vendors that are supplying you, you have to be able to keep accurate inventory because if people are buying from you and you don't have accurate inventory, they're going to bounce, they're going to go elsewhere. They're going to not think things are available.

So I know there's this fine line and this dance. You always hear people people say, "keep your displayed inventory low to create a sense of urgency." I can't tell you the number of times I've heard that, and I don't necessarily disagree with that. But on the other hand, if in this case with eCommerce group buying, if people are buying in bulk and I've got most people buying in quantities of two and half a dozen, and so I don't want to put more than 20, but then all of a sudden I've got a wholesaler that wants to come by 100 and they come look at the website, see there's only 20 and they don't buy when in actuality you've got 1000 and you just lost out on your biggest sale. So there's a fine line between what you may and may not show. Maybe you show a different inventory to the different groups. So when they log in, wholesalers see the bulk inventory and how many you really have in stock? Maybe that's completely different.

The ability for the platform to create quantity-based discounts, especially for wholesalers, distributors, and larger purchasers which might roll into the next one, which is either customer-specific pricing, account-specific pricing, and then membership-level pricing. Are there differences between bronze, silver, gold, platinum, and diamond members? Do they get a different price? Is there a different membership cost? Are there different benefits that each of those groups get to purchase said levels

Discounts are tough, so you want to make sure you have a robust eCommerce framework. I might bring up a screenshot of our platform here just to give you an idea of what our UI looks like when I create a discount here. 

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RON: So at the top here, I can decide, do I want to apply this to the order to a specific product? Am I going to do a BOGO? Right, or in our particular case, we allow a buy "X, get Y" free, so it could be something like "buy ten, get two free," so you can create any number and give any number. 

Are they combining billing? Do they have a start and end date? Is that a dollar percent off or is it a percentage off? Are we applying this to a particular category of products only? You know, before school you see a lot of—I remember growing up, mom and I would always go to JCPenney before school because they would have tax-free weekend on all clothing before school. So all us kids did our shopping the week before school. 

Going further down, combineable, auto applied. Can I combine this discount? If I can't combine this discount so people can stack coupons, then can I set a priority on them so I can decide which ones to apply first? Or does the eCommerce platform, if people applied multiple discount and they're non-stackable or combineable, we'll actually calculate them and pick which one gives them the biggest dollar amount off the order and auto-apply that one.

Is one auto-applied, i.e., if you order at least $500, you get free shipping. Well, if they're ordering remote, it's pretty nice to know, do you give them a total or a running subtotal in the micro-cart up above and a reminder that hey, if you hit $500 you get free shipping. And we're going to talk about some of that because some of that's pretty complex and we do that and it's really fun. 

 

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Continue to Part 2 to learn more about group customizations.