Saturday, February 19, 2011

Too small to bag a bulk discount? Join the 'crowdsourcing' clubs

Last updated at 9:24 PM on 19th February 2011

As food and fuel prices continue to soar, now is a great time to club together to get the best deals.

From forming community-based co-operatives to using cutting-edge websites offering special rates on the cost of utilities, a joint approach can boost spending power in these tough times.
Financial Mail looks at the best ways to team up.

Online Collectives

Trainee barrister Emma Knight signed up to a month ago but she is already telling her friends to join. Incahoot is one of a new breed of 'collective' or 'crowdsourcing' websites that use bulk buying to negotiate special rates and discounted deals.
It is free to join and Incahoot currently has a handful of deals on offer - these include broadband, gas and electricity, iPhone handsets and mobile phone packages.

Emma, 24, who lives with husband, Matthew, 26, a research executive, in Wandsworth, south London, went to Incahoot on the recommendation of a friend as she wanted a better mobile phone deal with O2. A simple switch saved her £360.

'I've been with O2 for six years and was spending £20 a month for which I got 600 free minutes and 1,000 free texts each month,' says Emma. 'With the Incahoot deal I got a free smartphone and for £20 a month I now get 900 free minutes per month and 5,000 free texts.

'The same deal with O2 on the High Street would cost me £40 per month - so I've made a big monthly saving. The cherry on the cake was the £120 cashback for doing the deal.'
Emma is so impressed with Incahoot she says she will switch to the broadband and energy deals once her current contracts come to an end. For each friend she recommends who signs up to a deal, she will also get a £10 reward.

'I've made a note in my diary to switch using Incahoot once my current contracts expire as I don't want to have to pay a penalty,' says Emma. 'Incahoot will email an alert.'
Another collective website - - claims to be able to negotiate discounts of 50 to 90 per cent on deals with popular retailers as well as local businesses.
You register for free and can check out the national and local deals in your area - from discounts on restaurant meals and cinema seats to cut-price spa treatments.


The co-operative model is becoming more fashionable in this age of austerity, but it is certainly not new. The first co-op was set up in 1844 by workers in Rochdale, Lancashire, angry that food prices were too high and that the shops were owned by the mill owners.
The workers began their movement by offering staple products such as butter and sugar in their own shop, banding together to negotiate the best wholesale prices for members.
Today, as more households are seeing their budgets stretched, the idea of banding together with others in the local community to maximise buying power has never been more relevant.
Ed Mayo, secretary general of trade association Co-operatives UK, says there are more than 400 buying cooperatives.

'Our research shows half of consumers are planning to save money by co-operating with others this year,' he says. 'Co-operatives have always had a good reputation for being ethical, sustainable and member-controlled, but now the cost-saving aspects are becoming increasingly important.'

The Government will launch a consumer White Paper next month that will include proposals to encourage everyone to join local co-operatives, for example to buy groceries.
There are a wide range of cooperative businesses, but they all have basic principles in common - they are owned and run by members and profits are used for the benefit of members.
Joanna MacDouall helps to run the True Food Community Co-operative in Reading, Berkshire. The group has grown out of a small buying club set up by several independent wholefood shop owners who were forced to close their businesses following the building of a large shopping centre in the town 12 years ago.

True Food is a similar concept to the People's Supermarket, based in Holborn, central London, which features in a Channel 4 programme on Sunday evenings. True Food initially ran markets every other weekend at local community centres, with the focus on organic food.
Today, the co-operative has more than 200 members and tens of thousands of customers flock to its Grove Road shop as well as the regular markets.
Membership is £10 a year, but that includes a £20 shopping voucher as well as various special offers and discounts.

Although the ethical and healthy living aspects of the co-operative are what tend to attract people initially, Joanna believes there are significant savings to be made. 'There is often a perception we'll be more expensive because our goods are organic,' she says.
'But we're usually buying direct from suppliers, cutting out wholesalers, so we can really reduce costs and bargain hard for our members.
'As prices are soaring in the supermarkets, many of our shoppers are pleasantly surprised at our prices, particularly for our fruit and veg.'

Joanna also says most of True Foods' goods are sold loose, so shoppers can buy as much or as little as they want.

The aim is to minimise waste, but this can also cut bills. It is the antithesis of the supermarkets' 'buy one get one free' offers, which encourage consumers to pay more for goods they often don't want. 'Sometimes you might only want one apple or a small amount of cereals or pulses,' says Joanna. 'At our shop you can do that. You don't have to pay for more than you need.'

Joanna, the chief buyer for the group, also runs the shop with manager Alex Trott and markets manager Chris Aldridge - one of the founders. In total there are four paid members of staff, but the cooperative also relies on volunteers.

'We are so much more than a buying club now,' says Joanna. 'As more consumers become disillusioned with the big supermarkets and others look to make their household budget go further, this is when co-operatives are filling a vital gap in the market.'
To find a food co-operative in your area, visit For more on setting up a co-operative, visit

Investment clubs

Being a member of a club has benefits when it comes to investment as it means you can tap into the ideas of other investors.

Investment clubs can be set up by families, work colleagues and friends up to a legal maximum of 20 people.

The aim is to pool cash and ideas and then invest in the stock market. There should also be less risk as the larger pot of pooled cash means that investments can be spread across a wider variety of shares.
Clubs usually meet regularly, typically once a month, to discuss investment strategies. Members all pay the same amount into a collective fund, for example £25 to £30 a month. Ideas are then discussed and members share their opinions and research on particular listed companies.
A treasurer is nominated to look after the buying and selling of shares and a secretary keeps the minutes of meetings. There is more information on setting up and running an investment club at It also has a manual for £25.

House buying

With the average house price now six times the average annual wage, it is not surprising that millions of buyers are shut out of the property market. And those on their own - without the extra income of a spouse or partner - face an even greater struggle to get on the ladder.
Joining with friends or a family member to buy property has become increasingly common since the property boom. It can give those fed up with wasting cash on rent that all-important first foot on the ladder.

Many banks and building societies will lend mortgages to groups of friends, typically up to four unrelated people. David Hollingworth, mortgage expert at broker London & Country in Bath, Somerset, says that Britannia - now part of Co-operative Financial Services - NatWest, HSBC and Santander are probably the best known for this.

'Lenders will usually base the mortgage amount on the two biggest salaries where there are more than two friends involved in the purchase,' says Hollingworth.

'But if three or four people are named on the mortgage application they will all be jointly and severally liable for repayments. This means if one person is unable to pay, for example due to job loss, the other applicants will still be expected to meet the full monthly payment.'
Hollingworth advises that friends draw up contracts to avoid disputes at a later date, for example if one person in the group wants to move out or sell.

'It is a good idea to know in advance what will happen when circumstances change,' he says. 'It can avoid problems and fallouts further down the line.'

Best friends James Bertioli, 23, and Stefan Canavan, 24, have just bought their first property - a two-bedroom flat in Balham, south London. The two management consultants paid £320,000 for the property, putting down a 20 per cent deposit, and both agree it would have been impossible to buy on their own.

They have taken out a lifetime tracker loan from ING Direct with an interest rate at 3.04 percentage points above the Bank of England base rate, which is 0.5 per cent at the moment. It means their starting pay rate is 3.54 per cent and their monthly repayments are £1,300.
In a further display of how clubbing together can work, a family friend has lent the pair cash to renovate the flat.

'The property needs some work, but we hope we can add value that way,' says James.

'If it is successful, our aim is to try to sell quickly at a profit and buy somewhere else, with an eye on another development that could make us money.'
To Learn More Click Here

No comments:

Post a Comment