If you are a consumer and anything like me, you're likely on the constant lookout for ways to save money. One common and very effective strategy for saving money is buying food and household products in bulk. Wikipedia defines bulk purchasing or "mass buying" as the purchase of larger quantities of products than your usual required quantities, for a unit price that is lower than the usual purchase price. The type of goods you buy may affect whether you should make bulk purchases. Perishables, like fruits and dairy products, must be used fast to avoid going rotten. Some of the most common goods that are safe to buy in bulk include Rice, Dry beans. Cleaning supplies, Toiletries, Canned foods, Diapers canned beverages and soft drinks. These are all safe to store at room temperature and have a long shelf life.
Advantages of bulk buying.
Buying in bulk is almost always cheaper per unit. Bulk buying reduces the cost per unit and can reduce how much you pay in the long run on the products use at home. Just be sure to choose the items you buy in bulk wisely to avoid ending up with more than you need.
Buying in bulk makes it easier to handle emergencies: Scarcity refers to a gap between limited resources and theoretically limitless wants of consumers. For example, With a lockdown in place, and cases of COVID-19 rising quickly in Nigeria, many people could no longer travel to their local markets where they sourced much of their needed goods. In any case, during the lockdown, most of those markets were closed, and other sources of supply were also unavailable. Bulk buying became an essential part of the people lockdown management strategy as it reduced the number of times people had to leave their homes, thus keeping them safe and preventing the spread of the disease.
Bulk buying is more environmentally friendly: A major plus for bulk buying is that it reduces the carbon and energy footprint on the product packaging. We also reduce the number of containers that are discarded daily and that accumulate in landfills or, worse, in the natural environment such as streams, rivers and even the oceans.
Buying in bulk is an upfront expense. To take advantage of bulk buying, you have to buy it all immediately rather than spacing out the purchases. You might only pay N3000 for N5000 worth of toothpaste, but it's N3000 now rather than N1000 payments spread out five times over several months. For some people, this financial difficulty is the greatest barrier.
Bulk buying requires a significantly larger space designated for storage. If you live in a smaller house. Bulk buying might be difficult for you, ensure you have the necessary space to store the items purchased to avoid unnecessary clutter.
Finally buying in bulk means you might have less variety in the products you use.
(A great way to mitigate some of these problems would be to form a cooperative society or bulk buy group, that way you still get the value of your money and an amount that is adequate for you, it’s a win-win).
The easiest way to buy in bulk is through an online service like Pack'N'Pay. By leveraging technology to make products more easily available to retailers and consumers at lower prices, Pack'N'Pay helps small retailers boost sales and improve their livelihoods and allows consumers to save money when shopping. Instead of having to navigate a fragmented network of distributors and wholesalers, our customers can connect directly to leading consumer goods companies via our Pack'N'Pay website on their phones and laptop.
Profit & loss or P&L is also often referred to as the income statement of the business. This is because at the end of each period (month, quarter, year) the business generates a set of financial statements that help paint a clear picture to the management and business owners on how the business is performing.
Managing P&L is all about maximizing sales and minimizing costs in a sustainable way that does not endanger the long term growth of your business while still maximizing profits at the end of the period.
Your profit margin is one of the best indicators of whether your retail business is operating efficiently and how profitable it is. It also answers critical questions about your business, such as whether products are priced correctly or if operational costs need to be reduced.
Retail profit margin takes into account the initial cost of goods and expenses a business has to pay to produce and sell a product. More importantly, it demonstrates the portion of each revenue naira that is actually earned.
Types of retail profit margin
There are 2 main types of retail profit margins which we will cover today. They are the
Gross Profit: Revenue — Cost of goods sold(COGS)
Example: Let’s say your company’s total revenue is N2, 500,000 for the month, and the cost of goods sold is N2, 000,000. Your gross profit margin would be:
N2, 500,000 — N2, 000,000 = N500, 000
In naira value, your gross profit margin is N500, 000 for the month. To convert that as a percentage value, divide the gross margin amount by total revenue, and multiply that by 100.
N500, 000 / N2, 500,000 x 100 = 20% (gross profit margin)
2. Net Profit: Net profit after subtracting the allocated business expenses incurred, as well as everyone’s favorite additional cost, taxes. These expenses include things like the shop rent,
Example: Your retail store generates N2, 000,000 in sales for the quarter. Your product costs and operating expenses came out to N1, 500,000, and your overheads costs amounted to N200, 000.
Below is how you would get your net margin percentage:
N2, 000,000 — (N1, 500,000 + N200, 000) = N300, 000 (net profit)
N300, 000 / N2, 000,000 = 0.15
0.15 x 100 = 15% (your net profit margin)
Considering all business expenses and not just the cost of goods sold is really crucial when calculating your profits. Many people often overlook the extra costs these bring and thus underprice their products and services. Calculating you margins often will help you focus your best efforts, talent, and attention on selling your most profitable products, services, customers, niches, or channels.
One of the easiest ways to increase your profitability is to buy goods more effectively. It makes sense to review your suppliers regularly. This allows you buy the same raw materials more cheaply or efficiently. However, you must ensure that you maintain quality at the same time.
The easiest way to find quality, products at the best prices is through an online wholesale platform like Pack’N’Pay. We partner with many vetted suppliers and manufacturers to bring both convenience and efficiency to our customers. We also ship the goods right down to your store thus ensuring you don’t have to take time out of your busy schedule to go product hunting. On our platform you can find soft drinks, breakfast beverages, pasta and so much more learn more about us today.