They are formed for the benefit of consumers who wish to get household goods at reasonable prices. These societies purchase of goods in bulk quantity from producers directly or from wholesalers at wholesale rates and sell the goods to members. Sometimes the goods are also sold to non-members. The prices for non-members would be higher when compared to the prices charged from members.
Since purchases are made directly from the producers or wholesalers in bulk quantities, the cost of purchases is less and they are able to pass on this benefit to members in the form of lower prices. They ensure steady supply of goods to members. The difference between the sale price and purchase price represents the surplus earned. The surplus is distributed among the members in the form of bonus.
There are various types of Consumer societies like Primary societies at the local level, Central or wholesale societies at the district level, State Consumer Co-operative Federation at the State level and National Co-operative Consumer Federation at the National level.