Over the past 20 years or so, I have facilitated and hosted group buys for a tiny group of two, right up to a group of 100 people, and with my biggest group buy of the year about to begin, I thought it was time we talked about how to host a group buy. I’m going to share my methods with you so that if you and some friends are thinking of splitting the shipping on a little craft splurge, you’ll have the formula for calculating shipping and currency conversion.
What is a group buy?
Essentially, a group buy is when a bunch of people get together, pool their shopping lists and one person shops on behalf of the group. The aim is to save money on shipping, especially international shipping, which has become incredibly expensive over the past few years.
If you are someone who enjoys online shopping, has experience shopping with overseas stores, has a little time on their hands, and enjoys receiving and sending happy mail, then perhaps hosting a group buy would be a fun activity for you. Hosting carries quite a bit of responsiblity around collecting and spending other people’s money as you make the purchase and distribute the order to participants, so good communication and basic math & spreadsheet skills are helpful as well. This is not something you do to make money, but something you do to help out your fellow crafters.
The most important element in a group buy is trust. The participants trust the host to keep their money safe, make the purchase and send their items. The host trusts the participants to pay in a timely manner and they trust the supplier to send the items they order. And everybody trusts the postal system to deliver the items they’ve ordered in good condition.
How to be a good group buy participant
* Make payments to the host on time, and provide information to help them get your order to you quickly.
* Read all information provided before asking questions.
* Be patient. It takes time to do calculations, and international shipping can be incredibly slow.
How to be a good group buy host
* If your group of friends is online, in a variety of locations, set up a sign-up form. It’s a quick way to collect all the information you need for your group buy, without a lot of unnecessary emails back and forth. We’ll talk about that more shortly.
* Know what your expenses are going to be (product, shipping, taxes, import duties) and read over the website’s shipping information before making your purchase.
* Calculate cost with conservative numbers. Better to overestimate and give a refund, than to underestimate and need to ask for more money.
* Set a deadline for payments to be made, communicate it clearly. Allow time to receive payment so that the purchase can be made before stock runs out.
* Opt for payment methods that don’t rack up fees. I use bank deposit and Paypal family & friends. The aim, as a host, is to not be out of pocket. Even if someone uses Paypal family & friends with a credit card, a fee may still be applied. One of the advantages of being generous with your estimate is that it may cover any fee that Paypal might charge.
* Be knowledgeable of import duties for your country. Here in Australia you aren’t charged any import duties by customs until the value of your parcel plus shipping exceeds AU$1,000. If it’s a very large order, you may need to split it into two orders to keep it under the threshold. If you do that, it’s a good idea to leave a note at the checkout process asking for the parcels to be sent separately. Some businesses might see that you’ve placed two orders and combine them to save you on shipping, meaning well. I find that a note asking that they be sent separately, for customs/import reasons usually does the trick.
What is Stamptember?
My biggest group buy of the year is Stamptember. During the month of September, an online store called Simon Says Stamp has a huge event, where they release exclusive stamps, dies, stencils and more. There is a large collection of their own brand, but also daily limited edition sets created in collaboration with other stamp companies like Mama Elephant, Lawn Fawn, Tim Holtz, Gina K and more. Once those limited edition sets sell out (and boy do they sell out fast), they are never re-released, and are, therefore, highly sought after. I started doing the Stamptember group buy for some of my crafty friends who really wanted the sets, but were wrestling with the notion of paying shipping several times per month. It feels good to use my online shopping skills to make people happy. After running this group buy for several years it has become very popular, and I have some great methods in place to ensure that it runs smoothly.
How to manage sign-ups
I use Jotform, which I will link in the show notes. You can get a free account, create up to 5 forms and take 100 free form applications per month. Setting up a form is simple, with a options to the left of the form. I create boxes to collect name, address, phone number and email. I start with an intro, then a section with text, so that I can provide all the information that group buy participants need to know. I make sure that I have dates, prices and rules for the group buy in this section. I add a single-choice box for payment method, multiple choice box so they can choose which collab sets they wish to purchase and a single-choice block where they can indicate if they want to see the collab before committing, buy it sight-unseen or that they don’t want any collab sets, but want to buy something else. There is a box for non-collab items, a single-choice block if they’d like to sign up for my email list, and then last year I added 2 new boxes. The first is a box for questions, or a list of things they absolutely DO NOT want, like Halloween, vintage, cats, etc. This can help me make a decision on their behalf when a collab set is revealed. The other is a rule that items purchased in a group buy cannot be returned to me for a refund. Group buys are not something I run as part of my business, they’re a completely separate activity that I do for my fellow crafters. Returning items to overseas stores is expensive, and time consuming, so in a group buy, all sales are final. The most important is the final block, which is compulsory to check or the form cannot be submitted, by which the person agrees to complete the purchase. When someone fills in the form, you receive an email with the details. I keep all emails in a sub-folder so that they’re easy to find, and I can communicate easily with all group buy participants via reply email. Each time I run a Stamptember group buy, I refine my methods to make it easier, and if you decide to host a group buy, you can do that as well. It doesn’t need to be perfect first time, but if you think of a way something can be done better, make a note for yourself for next time. I keep my notes to self in a Trello board, as well as form emails, wording for Jotform sign-ups, payment details, and adjust each year before I copy & paste.
How to do the math
I have a tried and true method for figuring out what items are going to cost. I’m able to make calculations with ease because I do this for my business every week. It allows me to keep an eye on the currency conversion trends and changes in international shipping.
Let’s start simple … a purchase by Australian shoppers with an Australian store. No currency conversion is needed, so it’s a simple matter of figuring out how to split the shipping.
If everyone in the group is buying an identical item, or spending an identical amount of money each, then post can simply be split evenly between all participants. However, if each person is spending a different amount of money, splitting the postage becomes a little more complicated.
In this situation I simply take the cost of shipping and divide it by the total of product purchased. This gives me a figure that tells me how many cents of shipping have been spent per dollar of product purchased. For example … If we have purchased $350 worth of product, and the shipping is $19.80 for a total of $369.80. Divide $19.80 by $350, and that’s 5.6571c of shipping for every dollar spent. We will round that up to 6c.
Let’s say we have 3 people in this group buy …
Jane spent $200
Melinda spent $100
Gillian spent $50
How do we figure out how much each of them pays for shipping? Simple. Take each persons total and multiply it by 1.06.
Jane pays $212
Melinda pays $106
Gillian pays $53
This totals $371, a very tiny fraction over the actual cost.
If these friends all live locally, then no postage is required from the host to the participants. If this is an online group, though, then the host would need to figure out the cost of postage and participants would need to cover that.
Let’s look at a more complicated scenario … Australian shoppers with an international store. As Stamptember is coming up, I’ll use this as an example.
Once again, if everyone is buying an identical set, let’s say the Whimsy Stamps collab stamp & die bundle, then it will be easy to split the expenses evenly. However, some may want the stamp set only, others the bundle, and maybe someone adds an extra stencil.
Let’s say we have 5 people in this group buy …
Jane spent US$42
Melinda spent US$42
Gillian spent US$16
Susan spent US$16
Mary spent US$57
In this situation there are additional steps. First, we take the cost of shipping plus the additional $5 shipping-to-Australia surcharge, and divide it by the total amount spent on product. That will give us the cents per dollar figure to apply to each person’s spend for shipping.
Total is $173, and shipping will be $34.99, plus the $5 fee to ship to Australia. Shipping is $39.99, and when you divide that by $173, that’s 23.1156c of shipping per dollar of product. That amount is too small to roundup, so I would call it 23c per dollar. I like to make my estimate somewhat conservative, just in case postage costs more than expected, so I might base my estimate on 26c. Now we multiply the amount spent by 1.26.
Jane spent US$52.92
Melinda spent US$52.92
Gillian spent US$20.16
Susan spent US$20.16
Mary spent US$71.82
Now we need to factor in GST. Simon Says Stamp charges GST to Australian customers, which is 10%, and that is on top of product and shipping. To add this in, we take the previous totals and multiply them by 1.1.
Jane spent US$58.21
Melinda spent US$58.21
Gillian spent US$22.18
Susan spent US$22.18
Mary spent US$79.00
The last thing we need to do is currency conversion. Right now the Aussie dollar, compared to the US dollar is swinging between 64c and 68c, depending on the day, and payment method. I find that paying with a credit card is a slightly better conversion rate compared to Paypal. Let’s say the currency conversion rate is 66c with Paypal, so we should get 67c using a credit card. However, I like to give a conservative estimate, just in case the dollar drops on ordering day, so let’s go with 64c. We will use the card to get the best rate, and divide each total by .64. I also round up the total to the nearest 25c mark to account for any small underestimate, and make it a nice round figure.
Jane spent AU$91.00
Melinda spent AU$91.00
Gillian spent AU$34.75
Susan spent AU$34.75
Mary spent AU$123.50
If this group are local friends, then no postage needs to be factored in. But if this is an online group, then the host will need to factor in postage from them to each participant on top of these prices.
Once the purchase has been made, you will know the cost of shipping, and get an exact cents per dollar figure. And once the charge clears your credit card you will be able to figure out the currency conversion. To do that, take the total spent in US$ and divide it by the total in AU$ … and that will give you a decimal amount which is your currency conversion. I usually work with this to about 5 decimal points.
When you have the exact shipping calculation and currency conversion, you can do an exact calculation, and figure out the exact cost of each item, and therefore each person’s exact spend.
So in this case … that would be US$ cost of product x 1.231156 x 1.1 ÷ .67 = AU$ total (plus post if relevant).
In this case, Jane’s exact cost of product would be AU$84.89, which I would round up to $85.00. In the conservative estimate we charged her $91.00, which means she gets a refund of $6.00, or that could go towards postage if needed.
If you live in a different country, you won’t need to factor in Australian GST, but perhaps your country charges VAT and import duties differently. It is best to know what types of charges you will be up against before placing the order. A surprise refund is very welcome, but a surprise additional charge may not be factored into people’s budget, placing an additional burden upon them or you as the group host.
How to keep track of shopping
I use a spreadsheet to keep track of orders, and if you don’t have Excel, you can use Google Docs. If it’s a single order, that’s nice and easy, but if it’s a larger order, it becomes a little more complicated. Keep track of date, order number, items ordered, prices, order total + fees + shipping, currency conversion rate and AU$. The spreadsheet can be set up straight away, and adjusted when the amount clears on your credit card, thereby giving you the exact amount that each item costs. You can also set up sum functions in a spreadsheet, which makes calculations fast, and accurate.
My best piece of advice would be to start small. A small group and small number of items in your cart, make it easy for your first time hosting a group buy. Even though I have been hosting group buys for decades, I learned an important lesson the hard way during Stamptember last year. In 2020 I had 52 people join my group buy for 5 collab sets, then in 2021 I had 110 people sign up for 19 collab sets. That was twice as many people and almost four times as many collab sets. 100 people followed through with their purchases, I shopped 34 times and we spent over AU$20,000. Every single one of those orders needed to be checked, estimates calclated, an email sent detailing prices and payment details, then all payments need to be receipted and attached to order forms. Nobody knows which days the sets will be released, so I have to be at my desk at release time every day just in case, send photos of the sets to those who want to see them before making a decision, and monitor for replies, while making sure the items haven’t sold out, which is a delicate balance. Once the shopping is complete, all order forms are bagged and placed in boxes in alphabetical order in preparation for the orders to arrive. As orders come in, they needed to be checked off and placed into the appropriate bag with the order form. Correct calculations needed to be applied to every form, refunds made, and once everything arrives for each individual order, it has to be double-checked, packed, shipped and a tracking number sent. All of that times 100 is an enormous amount of work. What I learned the hard way is that boundaries are important, and as much as I want to help everyone out with their favourite collab, I am only one person, and I have to be sensible, recognising my limits. This year I am returning to a smaller number of collab sets, with only 7 shopping days, and I will be limiting the number of people in the group buy. I will also adjust my emails with payment details to be more multi-purpose, and have set up a Facebook group specifically for the group buy, open to participants only. My hope is that it will make for quick communication at release time.
I know that all sounds intense, but when you start off small, just shopping for a couple of friends, it’s super achievable.
My second piece of advice is around communication and information. There’s a saying I heard once … disappointment comes from unmet expectations … and I believe that to be true! I am super transparent about exactly how I do calculations, when orders have been placed, when orders ship, and when they arrive. If I make a mistake, I own up to it and make up for it. It is important to set expectations around how long it might take for items to actually arrive, and keep everyone up to date. Think about that time you were stuck on a train, and there was no information … it was frustrating, right? If there had been regular announcements keeping passengers up to date, there would be less anxiety and stress and frustration. It’s the same with a group buy. It is so important to keep your participants in the loop, because without up to date information, one’s imagination tends to go a bit wild. Common worries are that the host has taken their money and run off, or that the product sold out, the parcel has been lost or some other tragedy. But if you keep everyone up to date on what’s happening, they don’t have to wonder. A host who provides loads of information, who follows through and gets the job done, earns a lot of trust, and people will be happy to shop with you again.
So, if you’re thinking that you might enjoy the thrill of shopping with other people’s money, receiving fun packages and sending happy mail, then you might like to try your hand at hosting a mini group buy, give it a go and reach out if you have any questions. Happy shopping!
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