Buy wholesale with a personal supplier network

Economies of scale are a wonderful thing.  The more you're willing to buy from a particular vendor, the better the unit price they're inclined to give you.  Selling a thousand items a hundred times is a lot more work than selling fifty thousand items twice.  It's less bookkeeping, less tracking, less shipping, and less labor to sell bigger chunks of your inventory at once.

Likewise, businesses buy the materials for their operations in bulk all the time.  It's part of being competitive, and profitable.  Lower expenses mean that businesses can price more competitively, which translates to higher volume, and more profits.

Team up with your business-owning friends to get bargains

Local economies have a good mix of variety and personal relationship.  In a mid-sized community there is a spectrum of business owners that serve a good number of customers.  But the scale is not so big that it's impersonal.  Small business owners are friends with non-business owners, go to church together, have their kids on the swim team together, etc.

Your friendships with small business owners can be used (ethically) to tap into certain economies of scale, which effectively allows you to buy wholesale with the price, but not the quantity.  Here are a couple of examples:

• End-of-season Italian ice.  There was an Italian ice shop that was in business during our engagement and during the first few years we were married.  (The owner's wife made our wedding cake.)  We spent quite a bit of money there, for sure.  One of the last years he was in business, near the end of the season, we asked him if he would sell one of the containers to us for the winter.  (It was near addiction-level at the time 🙂 .) He sold a large container to us pretty much at cost.
• High-quality munchies.  A friend of ours has a niche food business.  He buys some of his food supplies by the pallet.  On a whim, I asked him if he'd consider selling some of the raw supplies to us; one in particular we consume quite a bit of, and the quality of what we have isn't the best.  I knew that he bought supplies that were high-enough quality that we'd have to go to a specialty food store.  The price he quoted me was about half of what a comparable product would cost from Walmart.com, and was cheaper than the “meh” grade we get now.

How to be a welcome side-customer

These were great bargains.  We bought in quantity, but we didn't buy so much that it would go bad before we got through it.

Still, I do think there are ground rules to trying this out on your business-owning friends.  Follow these guidelines and you'll be welcomed back for more:

• Don't use the material to compete against them.  Hopefully this would go without saying, but using the good deal you just got to compete against them in their market would be a really good way to ruin a friendship.
  
• Don't try to get the main service they offer at a steep discount.  It might appear that we kinda-sorta did that with the Italian ice guy mentioned earlier, but not really.  Yes, Italian ice was his main business, but he wasn't going to sell us anything off-season anyway.  We asked him at the end of the season.  We didn't consider asking him in the middle of the summer.  As for our friend with the niche food business, we're not even trying to learn how to do what he does.
• Treat the deal discreetly.  The two deals I mentioned above don't create a problem for the people who gave them to me.  The first guy is no longer in business, and I was vague on purpose in talking about what I bought from the second.  If you tell people about the deal, your friend will get pinged for the same deal, and then you've created a problem for them.  (They'll probably know it was you who blabbed.)  They may want to offer the deal to other people, but that should be their business decision, not one that's foisted upon them.
• Make sure it's win-win.  We got great deals, and we didn't argue the price down any further.  If the deal become too one-sided, the business owner may do it as a favor once because of the friendship, but if it's inconvenient, or a financial loss, they're not going to want to do it again.  (If my friend did sell his stuff at a loss, I'll make sure he doesn't do it again!  But I doubt it. 🙂 )

Have you gotten wholesale prices from your business-owning friends on some of these side deals?