The value of Buying Better Together

A post from Robin Murray, one of the Buy Better Together Challenge judges.  Robin is an industrial economist. Educated at Balliol College, Oxford, and the London School of Economics, he joined the London Business School, where he lectured in Economics, and then moved to the Institute of Development Studies, the national centre for the study and teaching of development at the University of Sussex, where he was a Fellow for 20 years.  During this time he acted as a consultant on industrial and development issues to a wide range of governments.

Collective purchasing was one of the inspirations in the birth of British co-operation in the 19^th century. In the 1820s the London Co-operative and Economical Society began by bulk buying for their members and estimated that it would cut their living costs by a third. Later the co-ops in Swindon and in Chipping Norton were set up initially to bulk buy coal for their members. And there is a sense in which the vision of the Rochdale Pioneers in the 1840s of starting their own shop was a form of buying better together.

Today the web has created new possibilities, for it allows us to ‘aggregate’ our buying power in quite new ways. Music lovers can get a CD they would like to have produced if 5,000 agree to buy it. We could imagine fair traders using a site like Pledge Bank to see if there are enough of us to support the purchase of coffee or (a real case) flip flops directly from a group of producers.  Both these suggest a co-operative version of Groupon where deals are negotiated with service providers if enough people sign up.  

Then there are the growing number of examples of football fans acting together, even co-operatively buying their own clubs. Some of this is organised locally, before and after a match. But the internet has expanded the ability of groups like this to act together. One of the most striking cases was of a football fan who put out a message on the web to see if there were enough people like him who would subscribe £35 to buy and manage a football club. To his astonishment 32,000 subscribed. After on line discussion, they bought Ebbsfleet United for £600,000.

In the past, collective purchasing has been easiest if it is local. And there are still great economies to be reaped if people get together locally – whether setting up a community windmill or establishing a co-operative broadband service as they have done in the market town of Alston in Cumbria. But the internet allows us to use our joint buying power beyond the limits of locality.

Sometimes it is a question of co-ordinating our actions wherever we actually do our shopping – for ethical campaigns like Move Your Money. In others, the things we buy together can be distributed over the web ( like music) via the grid (like electricity) by fibre optics (like phone or broadband services) or existing channels of physical distribution (like the post).  The general principle here is to see if there is an existing distribution network on which a project to buy together can piggy back.

Failing that, some projects have set up their own distribution systems based on local groups. A Canadian group of housing co-ops (themselves a form of joint purchasing) established a food box scheme for their members, and paid one of them in each co-op to act as the part time link and door to door distributor of the boxes. So consumers have to find a means of talking and deciding together, buying together and then distributing what they buy to each household involved.

We can see a broad historical pattern in all this. In the 19^th century there was a European wide movement for collective purchasing through co-ops and friendly societies. In the 20^th century these ties were weakened, particularly in towns and cities. The Western consumer boom was focussed on the individual. The ‘I’ took precedence over the ‘We’. There are signs that this is changing, that the ‘I’ can be enriched with more of the ‘We’. The past thirty years has seen the growth of a new consumer movement, concerned with the quality, impact and ethics of the goods and we buy. People have been rediscovering the advantages of pooling their buying power and their knowledge, just as the co-operators did in the 19^th century. 

These changes pre-dated the internet. But the arrival of the internet has radically changed things. It has made it easier to connect, to assemble, and to share.  The past ten years has seen a growing wave of social innovations in how we co-operate as consumers in the electronic age. New tools are emerging (like local money and the smart card). There are new protocols and rating systems, new types of consumer intelligence and new ways for consumers to relate directly with producers. They are all elements of a less fragmented and more complex consumer economy – one which has the potential to radically shift the balance of power in the market place.

In the past it has been the producers that have aggregated into ever larger units. They have found it better to sell together. Now we are finding ways of co-operating as consumers, and these initiatives that appear to be springing up all over the world are uncovering the hidden value of buying better together.