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Small orders + small orders = big orders

Low-volume buyers of packaging materials are striking up deals and saving up to 40% on their purchases through online demand aggregation.

Weatherchem customers can watch the price decrease as orders aggregate online.
Weatherchem customers can watch the price decrease as orders aggregate online.

Mid- to low-volume buyers of packaging materials can be challenged by minimum-order requirements set by packaging materials suppliers. If minimum orders are not met, the price of packaging materials may become costly because machine setup time is needed to adjust for small orders. Until recently, no one seemed to give much thought to the extra charges applied for small orders. But now, thanks to the Internet, a change could be on the way. Two small companies say that it’s about time. Gourmet mushroom and seasoning grower Pistol River Mushrooms, Gold Beach, OR, and spice wholesaler Advanced Spice & Trading, Carrollton, TX, are the companies. They’re ordering small quantities of stock lids online from Weatherchem (Twinsburg, OH) through its w4das™ demand aggregation program (www.weatherchem.com/w4das.htm), developed by application service provider eWinWin (Cleveland, OH). The changes for both Pistol River and Advanced Spice have been effortless and the savings substantial. Pistol River Mushrooms president Brian Hewgill estimates a savings of 30% compared to buying directly through Weatherchem. And at Advance Spice & Trading, representative Charlene Petry’s deals have closed with up to 40% savings in cost compared to a direct order. Demand aggregation brings buyers together around a specific item they all need to order and a specific ship date. As more buyers place orders, the price goes down. At the same time, the supplier gains planning and production efficiencies: Production runs are more efficient, changeover time is reduced, and the supplier lowers its costs. For each Weatherchem product, eWinWin creates an online DealRoom™ where the transactions take place. “It takes my small order and it accumulates all other orders that are placed. In getting that combined total, there is a cost savings,” says Petry. “Even though our usage is not a substantial amount, we can still have the cost advantage of a larger buyer.” According to Hewgill, Weatherchem’s w4das offers small companies the opportunity to help each other by buying together in bulk to get the price down for all. Inventory control is also an advantage developed through this ordering process. “Before, my orders were placed in such a rushed manner because I had to meet the minimum,” says Petry. “I would wait until we were almost out of stock before placing my orders. Now orders are more consistent and steady because I am able to bring in the minimum quantity.” The minimum orders on Weatherchem’s w4das program are considerably less than buying direct: 8ꯠ pieces compared to 50ꯠ pieces (minimum varies). Petry has taken part in three DealRooms, buying the same plastic spice lid and pressure-sensitive foil liner each time. To date, Weatherchem offers eight of its highest-grossing closures on w4das. Hewgill, too, has gone to the DealRoom three times for lids used on his firm’s mushroom seasonings. “My concern with buying too many lids is that the seals we’ve selected are only good for 6-8 months,” says Hewgill. “You must think ahead or plan ahead. If you stay on top of your business, you have plenty of lead time.”

Let’s make a deal There is no fee for Weatherchem customers to buy through w4das. On the other side, Weatherchem is charged for the services of eWinWin. According to Weatherchem, the charge is comparable to using a distributor. By logging on with a password, a customer has access to various DealRooms. Before a DealRoom begins, Weatherchem sets the closing date, shipping date, and the price depending on how many pieces have been ordered. Then, eWinWin delivers an e-mail to alert Weatherchem customers of the newly opened DealRoom and its delivery date. Included in the e-mail is a link to the Web page. For new customers, information is available at www.weatherchem.com/w4das.htm. Customers can select the desired product category and then their specific product. Each product is displayed with an “order now” button. To make a purchase, the customer clicks on the “order now” button to input ordering and shipping information. A purchase order number or credit card may be used for billing. Customized orders may be placed by selecting from various seals, liners, and lid colors. A click on the “continue button” makes it possible to review and confirm the order placement. Weatherchem chooses to have each DealRoom open for two months. During this time, all orders placed within a DealRoom can be adjusted until the deal closes. By clicking on the “review offer” button, buyers can see a graph and information on the aggregation status and savings accumulated at that time. “Seeing the price drop as the aggregated orders came in really caught my attention,” says Petry. eWinWin also sends an e-mail during a DealRoom when the price goes down. According to Hewgill, the last DealRoom he took part in was not planned until he received an e-mail. “I wouldn’t have ordered again so soon, but the prices went down so much that it just enticed me to buy,” he says. “I noticed that one more order would bring the price down another notch. I went ahead and ordered and, before the deal room closed for that particular deal, it dropped down again.” After the deal is closed, eWinWin sends an e-mail to all buyers indicating the final price. The order is shipped 10-15 days after the closing date. According to Petry, knowing the ship date and the final price is key. “There are no surprises,” she says. “I no longer have to deal with calling customer service and disputing what has been confirmed.” Hewgill has been so pleased with the new buying process that he has asked eWinWin to expand its product categories to include his bottle suppliers. “It’s an advantage to have somebody who is not on your payroll out there looking out for your best interests,” he says. “It helps me because if I don’t have the time to remember the happenings of DealRooms, eWinWin stays on top of it and sends me e-mail so I can decide whether I need lids or I can anticipate that I’m going to need them.” Petry was uncertain about ordering online at first. “I was worried that someone actually had my order, that it was handled properly, and that it was going to ship with the proper product,” she says. “It was a different method of buying that I was unsure of. But the customer service person at eWinWin,” she adds, “put me at ease.” Now she is actively watching how the prices decrease ... and getting a deal on her small-quantity purchases.

See sidebar to this article: Packaging distributor saves 20% online

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