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Subdividing bulk raw ingredients
Hello, all.
As we all know, the minimum order quantities for most ingredients can be . . . . a bit high. To that end:
-1- Do we have (or does there exist) a “forum” where one can go to split up, say, a 1kg parcel of a raw ingredient?
-2- Has anyone considered becoming a repacker/reseller? Is the cost to entry high, or is this a relatively easy business? (I’m still somewhat amazed at the number of different resellers I need to go to for things — half of which are overseas — and even then I can sometimes not find what I need/want.)Thank you.
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2 Replies
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This all comes down to economics. Big raw material suppliers do not want to sell small quantities. So, they have high minimum order quantities. There are a number of “repackers” like https://makingcosmetics.com
The problem is that they have to buy a large quantity, then hope that they get enough small buyers to get their initial investment back. It can be done but it seems like it’s a tough business to be in.
Imagine, you have to put money upfront to buy your raw materials. The more diversity of your selection, the more money you’ll need to have tied up in inventory.
Then you have to split up the bulk raw material you bought (55 gallon drum or a 50 lb bag) into smaller units.
Then you have to sell each of those units. This involves packing up the containers, shipping to some address, including the proper paperwork, then having customer service to handle complaints/returns.
These businesses don’t really want to be in the commodities business selling popular ingredients because then it just becomes a price war to get to the lowest price/profit.
So, they want to be the exclusive seller of a hard-to-get material. That way they can maximize profit while minimizing competition.
But some ingredients big companies won’t even sell to small distributors. There is just too much hassle for not enough profit.
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Interestingly, I did have an idea this morning after hearing about how people adapted to the lockdowns in Shanghai. Essentially, they set up a kind of Kickstarter system for food. They would take orders and then when enough orders were collected, then they would buy the food and distribute it.
So, maybe there could be a “kickstarter” type sample filling business.
You see, the main problem with filling small orders is that you need to put money up front to buy the bulk ingredient. Then, you have to store the ingredient in a warehouse and hope that it eventually sells through.
Well, the idea would be you pledge money to buy a portion of an ingredient. And then only when there were enough orders, the bulk ingredient would get purchased and sent to everyone who pledged money.
This way, it would cost almost Zero money to start, have minimal inventory requirements and only in-demand ingredients would be purchased after a profit was guaranteed.
If I wasn’t distracted with so many other ideas, I might work on this one. lol
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