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Proven Bulk-Buying Strategies

When to Buy in BulkIf America bills itself as the Land of Plenty, then Americans might well consider it nothing less than their civic duty to buy in bulk. And with all the warehouse-sized emporiums that have sprung up in the past decade, it seems we take that duty seriously.

But to be honest, aspects of the bulk-buying experience can be troubling. It might be cheaper by the ounce to buy a 15-pound bag of tortilla chips, but let's face it: With 15 pounds of tortilla chips hanging around the house, you'll be prone to snack a lot more often. The chips still disappear in record time, your waistline, on the other hand ... talk about "bulk."

It's either that, or the opposite effect: Buy a 25-pound bag of oranges, then discover the kids aren't into oranges that week, and either try to eat as many oranges or possible yourself or waste food. How could a purchase brimming with so much citrus end up so fruitless?

And so this week's Savings Experiment looks at the ins and out of buying in bulk and how to strike a balance between sensible consumption and smart storage. Be it Costco or Sam's Club, cases of soda or mega-packs of shampoo, there's a fine line between making that warehouse trip worthwhile or wasteful.

Make Your Savings Purr: Think "Per Unit"

It's estimated that warehouse clubs can offer savings of 20% or more on most products, says Michael Clayman, editor of trade publication Warehouse Club Focus. But a good price doesn't always make for a good deal. And keep in mind that 20% figure is based on finding the best bargains.

Bulk buy stores don't want you to know this, but not everything they sell comes at a bargain price. And so you could find yourself carting home tons of stuff, but not saving yourself any money. The key to making bulk buys work for you lies in the "per unit price."

"Per unit" represents what it sounds like: It's the true cost of a commodity when you break it down to its simplest, practical measurement. How much is that cereal per ounce? Those paper towels per roll? The per unit price brings clarity to a shopper's bulk-inspired mania: You no longer have to guess at whether you've got a great deal. So if 45 rolls of toilet paper cost $1 per roll, and an 8-pack at the local supermarket costs $1.10 per roll, you can better determine whether that bulk buy really represents a fabulous bargain.

Don't want to do the math? You can also use the iPhone app RedLaser to make smart bulk-buy decisions. The application turns your smartphone into a product scanner, and tells you whether the price you'll pay is worth it, or can be beat elsewhere.

Warehouse Club Basics: The Fees, The Finds, The Foibles

Every warehouse club carries with it costs you might easily overlook. For starters, there's the fee you pay to join; in Costco's case, the $50 membership fee may be offset by the 1%-to-3% rebates you earn using a Costco American Express card. That card will also earn you further rebates when you use it at non-Costco stores, but if you don't pay it off each month you'll accrue interest charges that will wipe out every penny of savings that you'd hope to realize. Did I mention that the interest rates on these cards far outpace the best credit card deals elsewhere? If you can't pay off the balance each month, use cash instead.

Some items at warehouse clubs represent consistent values: toiletries , toothbrushes, vitamins, diapers, cleaning products, cooking oils, cereal and dog food among them. Also, you can buy items in large quantities, from Starbucks Frappuccino drinks to canned sodas, that will cost much less than if you buy them at the coffee shop or from a vending machine. Another good bulk buy? Jewelry. Believe it or not, the deals at warehouse stores give jewelers some serious competition.

Still, one thing to watch for is a phenomenon I like to call "The Costco Effect" -- though you could just as easily call it "The Sam's Club Effect." (Just sub in the name of your warehouse club of choice). That is: Buying in bulk presents a tremendous temptation to also consume in bulk. You squeeze out way more shampoo in the shower; you make twice as many trips to the pantry to eat snacks; you drink two sodas a day instead of one. Sure, you saved on the per unit price, but your out-of-check consumption habits led you to spend way more money in the long run. It's happened to me, and many of my Costco compatriots report falling into the same, piggy pattern.

I also believe strongly that the multiplicity of bargain displays entice buyers to go for things they wouldn't buy otherwise. Impulse buying is a bad idea in the first place, but at a warehouse club it can prove especially wasteful and worrisome. Stick to that list you walked in with.

Even with items on your list, be careful. It's true that the freezer is your friend -- especially when it comes to bulk ingredients, which can easily let you make doubled recipes and multiple dishes from the same basic ingredients. Many of these dishes can then be frozen to extend the life of your tasty bulk creations.

That said, there will be trade-offs: How much does it cost you to run that extra freezer to store your bulk buy bargains? Some studies suggest the extra electricity for a stand-alone freezer can run about $70 a year.

From Perishable to Cherish-able: Bulk Buying Refined With "Bulk Buddies"

You may wonder how you could ever take advantage of bulk bargains when the quantities of produce are so hefty, you'd need a month to eat halfway through them. Enter the idea of enlisting some bulk buddies. Here's how it works:
  • Take one bulk buy membership and split it four ways, for example.
  • Go to that warehouse store and buy as big a crate of pomegranates, cherries or spinach as you'd like.
  • Split up the booty equally between you and your three "bulk buddies."
Of course, this does require coordination and cooperation; hopefully the buddies will pay up promptly and take turns helping with the shopping. Assuming you can clear those hurdles, you'll turn one of the warehouse store's savings obstacles into money in the bank.

The Checkout Line: Things to Remember for Your Next Bulk Endeavor

There's an argument that buying in bulk saves gas because of less frequent shopping trips, but that depends: If you have to take an SUV to the warehouse store versus walking a hand cart to the supermarket, you haven't exactly reduced your carbon footprint. So make these trips strategically, with an eye toward items that will store for long periods of time.

My ground rules for doing a bulk shop are simple, and worth a recap before you load up the hatchback:
  • Stick to your shopping list. Unless you see an exceptional bargain for an item you know you need -- not want, but need.
  • Defer to the "per unit price" when determining if a bulk buy is worth the money and labor of hauling it home.
  • Never run up a balance on warehouse club credit cards that you can't pay off at the end of the month. This will negate any savings you've realized due to lower prices.
  • When rebate checks arrive (as with the American Express Costco card), keep them in a safe place and avoid the temptation to rush out and spend it on junk.
  • Use the principle of group buying via a "bulk buddy system" to split up perishables and produce into portions that won't go to waste.

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