Creating Cooperative Identity
All Together Now
Purchasing Cooperatives primarily exist to provide independent retailers and distributors with a lower cost of goods and services. Member organizations typically join Purchasing Cooperatives for the financial benefits of group negotiations with their supplier communities, but do these members see themselves as members of the larger cooperative movement?
“Our typical member does understand that they belong to a co-op, and their understanding of what that means varies,” says Dave O’Donnell, President & CEO of Nemeon, a Purchasing Cooperative with over 150 independent roofing and siding distributors. “Some just see the monetary value,” he continues, “and some see deeper than that.”
Brett Barry, Vice-President of Camco Roofing in Mississippi, one of Nemeon’s members, described how his appreciation of the Purchasing Cooperative changed. He says, “To be honest, we joined Nemeon for the rebates and the position to negotiate better pricing.” His understanding of the value Nemeon provided began to change as he attended his first group meeting.
“I was totally drawn into the group with the amount of group knowledge that was shared with people who do ‘exactly’ what we do, but do it so much differently,” Barry says. “The benefits of the group include learning center [Lionguard University], branded advertising, Nemeon artwork, benchmarking, and so much more. Nemeon is much more than a rebate.”
How Purchasing Cooperatives Can Expand Identity
A stronger sense of cooperative identity can be created when Purchasing Cooperatives prioritize educating their member businesses about what it means to belong to a cooperative. For example, Sphere 1, a Purchasing Cooperative of tool, fastener and concrete accessory distributors, has a rich on-boarding process for new members that emphasizes what it means to belong to a cooperative and the value membership brings.
Emphasizing Value Is Key
The primary and most tangible value is increased revenue from rebates. But as O’Donnell explains, “If one looks deeper, there are many intrinsic values that have a bigger impact than rebates. Having a large peer group of business owners at your disposal is invaluable and is one of the key aspects all members speak about.”
The democratic nature of a cooperative has great appeal to independent business owners. Members enjoy having an equal say in the decisions made by their Purchasing Cooperative, and the principle of “one member, one vote” removes any concerns about their voice being diminished by larger members. Collectively, members contribute equally to setting policies, making decisions, and determining strategies for the larger organization.
The equitable and democratic nature of the cooperative also extends to economic capital. Members invest an equal amount into their cooperative, with each member holding an equal number of shares. Any surpluses are shared equally amongst members or are allocated back to the co-op to develop additional services approved by the membership that benefit everyone equally.
Democratic Member Control
The principles of democratic member control and autonomy and independence are they key differentiators between Purchasing Cooperatives and their primary organizational rivals—private Buying Groups. On the surface, private Buying Groups provide many of the same functions as Purchasing Co-ops, such as group negotiated rebate programs, but they lack commitment to cooperative values. In particular, belonging to a private Buying Group means giving up one’s voice within the group. Maintaining a sense of control has a great appeal to independent-minded business owners, especially in turbulent times.
Clearly identifying the value of membership within the Purchasing Cooperative helps build awareness of the values of cooperatives in general. Rob Moe, President & CEO of Sphere 1 agrees wholeheartedly. “Stronger Together!” Moe exclaims. “We preach this—that being a part of something like S1 is a huge benefit for all.” Sphere 1 provides members with enhanced vendor programs, superior education, and innovative practices.
Kinnuen Sales and Rental, Inc., joined Sphere 1 18 years ago. Greg Hughes of Kinnuen says, “So many people think of these Purchasing Co-ops as only in it for the rebate, and there’s no question that that’s a solid piece of it, but I still say it is one of the top five things that has made our business successful. And the reason why is the partnerships are different in this co-op. Our vendors look at Sphere1 partners different than they do non-Sphere1 customers.”
Brian Gersten, president of On Time Supply, another Sphere 1 member, adds, “There’s a lot more to it than just the dollars. What you put into the group is what you get out of the group… There’s a positive for everybody whether they are the biggest in the group or the smallest in the group. It doesn’t make a difference what your ranking is. We all work together.”
Members Get With The Program
Strong member programs such as education, technology services and succession planning that go beyond the typical focus on rebates add extra value, enhancing the identity with the co-op. Independent Suppliers Group (ISG), an office product Purchasing Cooperative, provides a good example here.
ISG launched its “Discover Your Next Move” program to support and guide their members as they re-think their businesses as everyone adjusts to the remote worker and customers returning to the work environment. The program includes an extensive education series.
Their members agree. As David Guernsey, Chairman of ISG, puts it, “So much more than a Purchasing Cooperative, ISG with Discover Your Next Move serves as a Sales Cooperative for our members. Beyond products, strategy and education are essential components of what ISG offers its members.”
Mike Gentile, President and CEO of ISG, says, “We refer to our members as members and not customers or dealers. We create marketing materials that highlight the aggregated strength of our total membership so our members can use it in their own marketplaces. We strive to create a culture within membership that takes pride in their co-op and being part of something bigger than themselves.”
Promoting Member Identity
Can Purchasing Cooperatives successfully promote a sense of cooperative identity among their members? “It takes effort on behalf of the cooperative, and you must take every opportunity to let members know they are part of a bigger entity,” Gentile says. Moe adds, “We have to bang the drum about this all the time, with both members and suppliers. Luckily, the mindset has changed over the last few years and we are seeing a new enthusiasm for the cooperative.”
Greg Hughes adds, “We’re all in this together – small businesses trying to make a difference against the big box stores. To sit out there and go it by yourself is difficult. I tell every small company to join a co-op. It changes your whole perspective on how much fun this business can be.”
Written by Steve Seguin
LBMX offers a business-to-business marketplace platform, helping independent businesses, their buying groups, and suppliers buy better and sell more. Its Private Group Marketplace for Groups has transformed billing and ordering, rebate management, real-time analytics, e-commerce and product information management across the building materials, HVAC, plumbing, sporting goods, industrial supply, manufacturing, and agricultural industries. Its LBMX Supply Cloud platform allows suppliers to look at their industrial distribution customers through one lens, offering full EDI, PIM, Analytics and Payments.
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