The way we purchase goods and services continues to accelerate and become more convenient. Whether it’s summoning a ride with Uber or Lyft, using Instacart to have groceries brought straight to our door, or reserving a table through OpenTable, nearly everything is now accessible instantly with the literal press of a button.
This evolution has significantly altered my shopping habits. As a frequent Amazon shopper, I purchased 162 items in 2016 — averaging more than three products per week.
My spouse and I completed most of our Amazon shopping via the mobile app because we noticed we were running low on staples like shampoo and dish detergent. In business terms, we were operating a just-in-time approach to household supplies, where items arrived exactly when we needed them.
As working parents of two young kids with jam-packed calendars, we appreciated Amazon as a fast, hassle-free shopping solution. But was that convenience costing us money?
The price of convenience
Although Amazon saved us time, during my annual family budget review I started to wonder whether that time savings came with a financial trade-off. To investigate, I exported a spreadsheet of every purchase we made last year from our Amazon account.
I quickly discovered that in our pursuit of ease, we had stopped watching prices or doing any comparison shopping and often added the top search result on Amazon to our cart. Since we tended to wait until several items accumulated before checking out, it was simple to miss individual item price changes, which can swing dramatically from day to day.
Most strikingly, I noticed we occasionally paid nearly double for routine products.For example, twice we paid $21 for a two-pack of mouthwash that costs $10.99 at Costco.
Because Amazon made up roughly two-thirds of the $1,200 we spent on household supplies in 2016, I realized there was room to trim these costs.
To regain control over our spending, I resolved to manage our household items more like a business manages inventory. Over a long weekend I built a new household inventory system focused on planning rather than impulse purchasing. (Go to File and click Make a Copy to try it yourself.)
While the inventory system is still evolving, here are the six steps I followed to get it up and running.
1. Review all yearly purchases
Using my Amazon order history and my Mint account, which tracked card charges at retailers like Target and Walmart, I estimated we spent about $1,200 on household goods in 2016. These items fell into two main groups: personal care (toiletries, health and cosmetics) and supplies (kitchen, cleaning and assorted items).
Amazon represented over $800 of those purchases, so the detailed online order records gave me a strong starting point for creating an inventory spreadsheet that listed what we bought, when we bought it and how much we paid.
I hadn’t kept receipts from other stores, so a few items were missing from the data.
2. Audit current stock
To account for the non-Amazon purchases in my master list, I performed an inventory check of every cabinet in our kitchen, bathrooms and laundry area. I recorded those items in the spreadsheet, along with my best guess of where we had bought them.
I also noted the size and remaining quantity of each product so I could plan what we’d need to order in the first quarter.
3. Compare prices and package sizes
Once the master inventory was in place, I compared prices for each of the more than 60 items across Amazon, Target, Walmart, Aldi and Costco. I gathered this information through online searches and a few trips to stores.
4. Estimate product lifespan
It was straightforward to estimate how quickly we consumed items we had bought repeatedly on Amazon; I simply looked at the date we ordered the next refill.
Figuring turnover for other products will require more observation. By year’s end I expect to have a rough estimate of how long each item lasts so I can plan purchases ahead each quarter.
5. Schedule quarterly buys and document everything
With quantities on hand and turnover estimates, I scheduled purchases for the first quarter based on which items we were likely to need over the next three months. For each product I performed a quick price check across retailers to identify the best deal.
I logged every new purchase into the spreadsheet with its date, quantity, size, price and store.
6. Reassess the inventory plan every quarter
We spent $236 in the first quarter. About 75% of that was devoted to bulk items at Costco, and we only spent $44 at Amazon. That left us $64 under our budget compared with last year, and the savings should build each quarter.
We’ll undoubtedly have some unplanned buys, but we’ll use the inventory spreadsheet to plan most of our spending at the start of each quarter and keep a record for future reference. Over time we’ll refine this household inventory approach, ultimately covering almost every product we routinely use.
From the second-quarter inventory check, I project we’ll spend under $150 from April through June. If the second half of the year resembles the first, the annual total will be about $770, meaning my new method should save us roughly $430 in its first year.
Based on last year’s outlays, I had budgeted about $100 per month for household supplies this year, but I can already see we’ll come in well below that. Our pantry is now well-stocked, we have more cash on hand — and our Amazon cart is empty.
