When Buying in Bulk Is Actually a Waste of Money

As inflation continues to skyrocket, even folks who once floated through grocery and department stores without paying much attention to things like “unit costs” and “price per pound” have started sweating their budgets and those of us who have always worked coupons with the precision and creativity of a mafia accountant are finding that our usual hacks aren’t yielding the same margins they once did. As everyone in the country seeks a little relief from rising prices, bulk-buying is coming onto more and more people’s radar.

Buying stuff in bulk is a simple concept: You purchase a large amount of something — say, toilet paper — and you get a break on the price due to volume. This is such an obviously good idea that warehouse clubs selling groceries and other items in bulk are a huge business with more than half a trillion dollars in annual sales. That’s a lot of pallets of toilet paper.

The simplicity of the concept makes it seem like you could simply purchase everything you need in bulk and enjoy maximized savings, but the truth is a little more complicated for two main reasons: There are hidden costs in bulk-buying and there are negative side effects. If you don’t watch out for both, you could wind up wiping out all the savings you enjoy on the front end.

The hidden costs of bulk-buying

First and foremost: Bulk-buying almost always saves you money upfront. For example, a 1 kg box of oatmeal costs you around $6 at the grocery store, but you can get a 5 kg box at Costco for around $11, saving you nearly a dollar per unit cost. That’s a lot of money you just saved. While the margin of savings varies depending on the category — buying applesauce in bulk, for example, will save you just a few cents per unit — if you apply a bulk-buying strategy broadly, you will absolutely rack up savings.

But then come the hidden costs. If you’re not careful, these costs can erode or even eliminate your bulk savings advantage:

• Membership fees. Buying in bulk usually requires a membership in a warehouse club-type store like Costco or Sam’s Club. These fees range from about $60 to $170 annually, so you have to subtract that from your savings total.
• The upfront hit. While bulk-buying savings are real, you have to keep in mind that the strategy also shifts your costs from the future to right now. In other words, make sure your budget can handle the hit. Buying your groceries in bulk might save you $100 overall, but you’ll have to come up with a lot more money right now to pay for them. If that causes you to miss credit card payments or scramble to pay rent, it might not be worth it — and it might not save you anything at all in the long run.
• Expiration dates. Food goes bad eventually. Buying that five-gallon jar of mayonnaise might seem like a great deal, but fast-forward a few months. If you still have half of it and there’s no way you can eat it all before it goes bad, you just blew your saving margin.
• Overbuying. Bulk-buying stores aren’t in it for the altruism. They want as much of your money as they can get. Bulk-buying is often coupled with aggressive marketing to encourage you to buy as much as possible — and to buy stuff you might not actually need. Just because a year’s supply of soda is a great deal doesn’t mean you need a year’s supply of soda on hand. If you buy too much because of bulk mania, you won’t actually save as much as you think because you’re spending more than you should.

The side effects of bulk-buying

Bulk-buying without careful planning can also lead to some negative side effects that can indirectly impact the savings aspect:

• Storage. Before buying several tons of bulk cereal, ask yourself if you have the storage space to handle it. This is especially crucial when it comes to anything you’ll need to freeze. Do you have a deep freezer, and/or vacuum-sealing tools to get everything safely stored? It’s important to remember that bulk-buying is an investment, and in order to maximise your return you have to actually be able to use everything you buy.
• Variety. Bulk-buying locks you into a specific brand or type of food. If you get a great deal on some crackers, for example, ask yourself if you can realistically eat the same crackers for the next several months without a break. If you get to a point where you can’t look at one more cracker, you’ll wind up buying supplemental foods and possibly letting your bulk buy go stale, destroying your savings margin.
• Overuse. Buying in bulk creates psychological pressure to use what you’ve bought. Not only are perishable bulk-buys always ticking away on an expiration date, but having stacks and stacks of stuff piled up in your garage will loom in your thoughts. This can lead to reckless use. If you have gallons of shampoo, after all, why not use it liberally instead of being careful or considering what that will do to your hair? It can also lead to using more than you would normally in order to make room or use it before it goes bad. The end result is your consumption goes up, eroding your savings advantage — and maybe even leading to weight gain as you make your way through your bulk food like a weevil.

Bulk-buying requires more than a calculation of the unit cost. You need a storage plan and a consumption plan to get the most out of it.

What not to bulk-buy

Some things will always make sense to buy in bulk as long as you plan for it, like cleaning supplies, non-perishable food like rice or canned food (though not canned vegetables — see below), shelf-stable beverages, and toiletries. But some things don’t work so well. Here’s what not to buy in bulk:

• Meat. This might seem obvious, but you’d be surprised. Buying meat in bulk only works if you have the freezer capacity to store it and don’t mind eating the same thing regularly for a very, very long time. Even if you do have a freezer, sealing and storing all that meat is time-consuming, and your time is worth something.
• Milk and produce. Fresh fruits and veggies are obviously difficult to store for long periods of time, so buying a ton of them will present quite a challenge and make little financial sense. Similarly, fresh milk (as opposed to evaporated or powdered) only makes sense in bulk if your family is the Brady Bunch.
• Coffee beans. Whole-bean coffee goes stale pretty fast. As a rule of thumb, you should only have as much coffee on hand as you’ll drink in about two weeks. Buying a year’s supply means you’ll be drinking some pretty awful coffee for most of the year.
• Snacks. Buying snack foods in bulk can save you money, but consider your willpower. If you’ll end up eating a bag of Doritos every day because you’ve got a thousand in your pantry, your eventual healthcare costs could offset your bulk savings.
• Canned vegetables. Canned veggies are one of the few exceptions in bulk-buy maths because grocery stores usually discount the smaller cans more frequently (and more aggressively) than the larger cans, and supermarkets almost always beat warehouse store pricing on canned veggies.

Bulk-buying is a great strategy, especially if you have a large family to feed and care for. But it’s not as simple as it seems. Keep the hidden costs and knock-on effects in mind when you plan your bulk-buying strategy and you’ll have a much better experience. And also never run out of Doritos ever again.