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It’s not necessarily a feasible option for everyone.
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There’s a reason stores like Costco tend to be popular. Shopping there often results in a lower credit card tab compared to shopping elsewhere. That’s because you can take advantage of quantity discounts, otherwise known as buying in bulk.
In fact, it’s not just Costco that offers consumers options for bulk-buying opportunities. You can load up on bulk items at stores like Target, Walmart, and likely even your local supermarket. And if you tend to spend time on Amazon, you’ve probably noticed that the online retail giant offers its fair share of bulk options, too, from toilet paper to granola bar multipacks.
But while buying groceries and other household essentials in bulk could be a nice source of savings, it also may not be an option for you if money is tight. Here’s why.
You need to spend more upfront to save
Let’s say you normally buy a box of pasta every week for $1.25. A bulk pack of 12 boxes might cost you just $12, which means you’re saving yourself $3 by buying pasta in bulk.
Here’s the problem, though. What if your grocery budget is very tight and you can’t afford to spend the $12 in one fell swoop for items you don’t need right away? In that case, you lose the chance to save that $3 and get stuck paying more.
Unfortunately, this is the trap that many cash-strapped or lower-income households might fall into when it comes to bulk buying. This is just a single example, but in many cases, buying in bulk means more than shelling out an extra $10 here or $15 there. And for households living paycheck to paycheck with no money in a savings account, that extra spending may not be feasible.
Let’s say spending $100 on a bulk shopping haul will save you $20 on the cost of those items compared to buying them individually over time. If you’re forced to charge that $100 on a credit card and carry your balance forward, you might rack up so much interest on it that you negate that $20 in savings.
Also, while you don’t have to shop at stores like Costco to take advantage of bulk-buying opportunities, often, that’s where you’ll find the largest selection of bulk items. But to join Costco in the first place, you have to pay a $60 membership fee (for a basic membership). If you can’t afford to spend the $60, you can’t join Costco — even if doing so saves you 10 times that amount in the course of a year.
An option some consumers can’t benefit from
You’ll often hear that buying in bulk is a good way to save money on food and essentials. And that’s good advice for people with a little leeway in their budgets.
But let’s remember that it’s an option that requires you to have some extra money to spend upfront in the first place. If you’re not in that boat, this may, unfortunately, not be such great advice for you.
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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Maurie Backman has positions in Amazon.com and Target. The Motley Fool has positions in and recommends Amazon.com, Costco Wholesale, Target, and Walmart. The Motley Fool has a disclosure policy.
