buyer's market

When Buying in Bulk Is a Mistake

You might not need all that. Photo: DOMINIC BRACCO II / PRIME/The Washington Post via Getty Im

I like the way Andrew Tobias talks about bulk buying in The Only Investment Guide You’ll Ever Need: You can think of each bulk purchase as an investment, with a return equal to the savings you accrue by not paying a higher unit price for smaller purchases. If you lay out $110 today to buy a 12-bottle case of wine you’ll drink over the next month, instead of buying bottles one at a time for $10 each, that’s like earning a $10 return on a $110 investment in one month. On an annualized basis, that’s a rate of return well over 100 percent — far better than the stock market.

But that analysis relies on a few assumptions, the most important being that you will use the items you purchase. If you let products spoil, or you decide you don’t like them anymore halfway through the box, or if you forget what drawer your huge package of batteries is in, then you’re not getting as much value out of your bulk purchase as you had planned. Your effective investment return is likely to be negative; you would have been better off paying more per unit to buy less.

Oh, yes, about the batteries: For me, they’re like stamps. I need them very occasionally, and not frequently enough to have a good sense of how many of them are in my apartment and where they are stored. So recently, when the batteries in my bathroom scale died, I spent ten minutes rummaging through various drawers in my apartment, and was only able to find two AAA batteries. I needed four, so I went on Amazon, where you can buy a 48-pack of Energizer Max AAA batteries for $19.55, or 41 cents per battery. That would be about a 16-year battery supply for me, so I decided to buy a 4-pack, even though that meant paying nearly twice as much per battery.

I feel good about this financial decision. Even if I would eventually use the whole package of batteries (a dubious proposition — they expire after a decade, for one thing) buying a multi-year supply of anything is likely a mistake. Time is money, and if you’re tying up your money in bulk products for many years instead of weeks, a 10 or 20 or even 100 percent return may no longer look attractive compared to keeping your money in the bank or the stock market. Plus, storage has costs — financial costs and also emotional ones, as Marie Kondo’s success in the de-cluttering business demonstrates.

I’ve learned the pitfalls of bulk-buying the wrong items the hard way. In my early 20s, I bought a 300-count box of dryer sheets at Costco. The first problem with the box was that it caused me to contemplate my mortality: The box was going to last me six years, which meant I’d probably only ever need to buy nine more such boxes, and then I would be dead. The box was far from used up when I moved from Washington to New York, and I paid movers to move it along with my other possessions. Shortly thereafter, I threw away the box, which still must have contained more than 150 sheets, because, like a typical millennial, I gave up using fabric softener. (It’s bad for your workout clothes!)

Amazon Subscribe & Save provides what should be a better way to manage recurrent-use household goods than traditional bulk buying: Amazon sends you approximately the amount you will need every few months, and you can speed up and slow down the deliveries as you see your consumption patterns changing. You don’t have to try to figure out what products you’re going to want years in the future.

This “just in time” approach to home goods is great, when you manage it right. But if you manage it wrong, you may end up buying 18 anti-perspirant sticks in a year, as I did in 2016. I forgot that I’d subscribed to a six-pack instead of single sticks, and then I forgot to cancel the subscription. Because of this accidental bulk purchase, I’ve had to devote a whole storage drawer under my sink to deodorant. Marie Kondo would be very displeased. At least I’m finally down to the last couple of sticks.

Or, if you’re like my sister, you may have used Subscribe & Save to purchase almost three-dozen 28-fluid-ounce bottles of Method Wood for Good wood cleaner between December 2017 and March 2019, not entirely on purpose.

“I think I tried to cancel it a few times,” she told me. “And then every time it arrived, I was like, ‘Shit! More Wood for Good!’”

My sister estimates that she uses a bottle of wood cleaner every two months or so — which frankly strikes me as a lot for one household, and makes me wonder if she’s cleaning already-clean wood just so she can use up her excess wood cleaner — but obviously she still doesn’t use enough to keep up with Amazon having sent her an eight-pack every three months for a year. She’s been giving the bottles away as gifts to houseguests.

But some people are better at this than my family. For example, Jarrett Skorup from Midland, Michigan uses the chest freezer in his garage to lock in great deals on meat and poultry for his family of five.

“We once bought more than a year’s worth of chicken for 40 cents per pound,” he told me. “We will buy in bulk for things like soup and noodles. But meat is the key savings.”

Whether that strategy makes sense for your family depends not only on whether you are conscientious enough to keep track of so much freezing and thawing meat, but also on whether you have room for a chest freezer in your garage, and on whether you have a garage at all. This is one of the costs of living in New York City: Not only are unit prices higher in grocery stores, it is impractical to buy a year’s worth of chicken when it does go on sale. Some New Yorkers told me they forego bulk buying altogether, on the grounds of not having a car and not having storage space. Others described to me strategies customized to the city: Ordering from Costco on Instacart; stashing bulk purchases under beds and above cabinets.

An advantage of the Costco-Instacart method for Manhattan living allows you to shop from home, while you look at your storage capacity and figure out where you’re going to put the things you’re buying. It avoids the risk of buying something on impulse and not having anywhere good to put it. And it also helps you avoid buying something you forgot you already have six of in a closet. One devotee of this shopping method tells me the markup for shopping on Instacart is similar to what he’d pay to take an Uber home from Costco with his purchases anyway.

There is one key thing retailers can do to make these buying decisions easier: Provide reliable and comparable unit pricing for products, so it’s possible to tell whether the big package is really that much cheaper on a per-unit basis. Unit pricing is only legally required in some states, and sometimes companies screw it up even when they’re supposed to provide the information. Plus, the units are sometimes not helpful: A price “per sheet” for paper towels might be misleading when the sheet sizes vary across products.

But unit pricing can take you only so far. After all, I really did pay a low price per sheet for that huge box of Bounce sheets from Costco. I did get a good per-ounce deal on the pound of Tellicherry peppercorns that I bought a decade ago and will probably still be working through during the Donald Trump Jr. administration. My advice when shopping is to ask yourself a simple question: If I buy this box today, will it still be in my cupboard or drawer or closet three years from now? If the answer is “yes,” pick something smaller, even if that looks like less of a good “deal.”

When Buying in Bulk Is a Mistake