MOQ can be a hassle for start-ups or e-commerce entrepreneurs.
The success of many merchants has benefited from cheap Chinese products.
They buy from China at low prices and then sell them at high prices.
But for entry-level or hard-working buyers, sourcing from China is not so easy.
For these buyers, a high MOQ is the first problem.
Usually, suppliers set a minimum order quantity(MOQ) for each product, especially on websites such as Alibaba and Global Sources. These platforms are B2B models, so the MOQ is usually high.
This means you have to buy a lot of the same products at once.
Sufficient cash flow is important to the buyer.
Getting a low MOQ maybe more important to some buyers than the purchase price. Don’t ask for low prices and low enough MOQs.
But don’t worry too much, you can use some tricks to lower the MOQ of each product.
Here is what you will learn in this article:
The minimum order quantity (MOQ) is the minimum number of units that a wholesale supplier allows a buyer to purchase at a time.
Suppliers have implemented this restriction so that they do not waste time and resources on low-margin orders. This concept is very simple and is used by wholesalers all over the world.
MOQ usually involves custom-made goods or goods that are not in stock.
The supplier has a lady’s watch and there is no minimum order requirement at first, but if you want to customize the package, appearance or some other functions of the watch, the supplier will request the minimum order quantity.
Can you negotiate MOQ on Alibaba?
Of course, just like you don’t have to accept the supplier’s first quotation, you can also not accept the supplier’s first MOQ quote.
Don’t be scared off by the supplier’s high MOQ, everything is negotiable.
Negotiation is the exchange of interests, mutual compromise to achieve cooperation. So when you want a supplier to lower the MOQ, you must understand why the supplier does this and what they want. Let’s analyze it below.
Most foreign buyers think that the reason why the supplier sets the MOQ is because they want me to buy more, and then they can make more money.
Based on SourcingArts’ experience in working with suppliers, only a few local suppliers deliberately set a high MOQ in order to make more money.
Most sellers get a minimum order quantity of the product after a series of cost calculations.
There are three objective factors that affect the MOQ of most products:
Raw materials include raw materials and packaging materials for manufacturing products.
Chinese suppliers tend to maintain minimum material and component inventories. Therefore, they must purchase materials and parts from subcontractors on order. This in turn requires the factory to be able to meet the minimum order quantity of the subcontractor.
Taking pillowcases as an example, fabric suppliers require textile factories to provide the minimum order quantity for fabric dyeing, which is usually 300 kg. Suppose a textile factory can produce 1,000 pillowcases with this 300 kg fabric, and their minimum order quantity is 1,000 units. If you only need 300, they will lose money.
In addition to low raw material and labor costs, the reason why Chinese products are so cheap is that most Chinese manufacturers tend to operate with meager profit margins.
The profits of most factories are usually not higher than 20%, and some are even lower than 10%. Low profit margins require suppliers to produce a large number of products in order to break even.
Machine costs have different meanings for different products.
Plastic products are produced by injection molding machines, and a large amount of raw materials are needed to clean and debug the machine at a time. Therefore, when the order is too small to cover the cost of the factory, the factory will not start the machine.
Screen printing, pad printing, cutting products, polishing, laser engraving, etc. all require machines to process products.
The most important thing is that a factory will not have all the machines for processing products at the same time.
Most of the time, the factory needs to cooperate with other factories for processing products to complete the order. Other suppliers will also set a MOQ for corresponding services. For example, the minimum order quantity set by a logo printing factory is 500 pieces.
The above are the three main factors that affect the supplier’s MOQ. If you can solve these three needs of the supplier, you are more likely to get a lower MOQ.
In addition to subjective factors, the subjective factor that affects MOQ’s knowledge is whether the supplier is eager to accept your order.
For example, when your purchase intention is not strong, when the factory order has exceeded the factory’s production capacity, the supplier may not care about your order very much.
In addition to understanding the reasons why suppliers set up MOQ, you should be clear about what you want? Why do you want to lower the MOQ?
Everyone’s fundamental reason for lowering MOQ may be different.
In short, no matter what kind of seller, a high MOQ means high risk. If the product sales are not good, all costs will be lost.
After you have figured out your needs and the needs of your suppliers, it will be easier to reach an agreement with your suppliers.
There are many ways to teach you how to lower MOQ on the Internet, but it is not effective for every buyer.
So more importantly, you need to know the logic to get a lower MOQ.
First, you must figure out why the supplier sets this MOQ?
As we mentioned above, the factors that affect the supplier’s MOQ are divided into subjective factors and objective factors.
The factors that affect the MOQ of each supplier and each product are different. The following factors may be factors that affect your supplier’s MOQ:
In other words, you should try to get the source of the MOQ number from the supplier. This is something that many suppliers will ignore.
When buyers ask suppliers “How about the MOQ?”
Most suppliers will directly tell you a number “500units” “1000units.”
Buyers will be scared off if they do not reach this amount.
But in fact, this number is meaningless to buyers. This number can only allow you to make a decision but not help you solve the problem.
So it is better to ask the supplier about the MOQ of product materials, packaging and processing.
For example, the supplier’s MOQ for a wireless computer mouse is 2000units. When you ask more deeply, you may get the following results:
Then you can find a solution to the problem according to your needs:
If you want to purchase different products in the early stage to test the effect of the products on the market, and the quantity you expect is 500units.
One possible approach is:
Persuade the supplier to purchase raw materials for your product along with other orders from the factory to achieve the MOQ of the raw material subcontractor. This is a concession made by the factory.
Note: The factory’s conventional products usually have multiple buyers. It is the factory’s normal practice to purchase raw materials together for different buyers’ orders.
As for LOGO, you’d better make corresponding concessions, so that the supplier’s psychology will be more balanced and will be more subjectively willing to make concessions to you.
For example, you can bear the cost of an additional 500 silk screen LOGO.
The cost of a silk-screened logo does not exceed 0.1 USD, and the cost of 500 logos does not exceed 50 USD.
This is only a small expense compared to the number of 500 products.
This approach not only solves the supplier’s problems and concerns, but also allows you to reduce the risk of large-volume purchases.
If you are not familiar with the manufacturing process of the product and the operation of the factory, you can get a solution from the supplier.
It is usually more effective to send your own “MOQ bid” to your supplier, rather than trying to calculate the supplier’s theoretical MOQ.
This way you can give suppliers the opportunity to consider your entire order volume.
After the supplier sees the list of potential buyers’ orders, it is common for the supplier to provide a significantly lower MOQ, at least on a per SKU or color basis.
Because after you inform the supplier of your specific needs, they subjectively want to cooperate with you
Taking into account all the factors when the supplier calculates the MOQ requirements, the MOQ discussion may be highly theoretical.
A few years ago, we worked with a European customer. The customer owns two stores in Europe. Large enough to match the supplier’s minimum order quantity, but not more than one or two products.
This is a problem, because storing 1,000 black computer bags and another 1,000 blue computer bags is not feasible for small businesses operating two stores.
Therefore, the customer’s goal is to find out how they can create additional SKUs (that is, more colors and shapes) while meeting the manufacturer’s minimum order quantity.
As mentioned above, this can only be done after you find out the supplier’s MOQ structure. Fortunately, we did it, and the results are as follows:
What we found here is that the MOQ is controlled by the subcontractor. Textile manufacturers. However, in terms of color, they have greater flexibility. Therefore, we solved a major problem.
The bigger gain is to find that the supplier has the minimum order quantity for each cut, which is set at 200 pieces. This makes sense because the supplier can control the minimum order quantity for each size. Cutting is a simple process, and each change does not require a large amount.
Therefore, customers are able to purchase 2 different colors of computer handbags-each with 2 different shapes. Up to 4 SKUs.
Data cable manufacturers usually set the minimum order quantity for each data cable design to 3000 pieces.
However, it is usually the labor cost that restricts its MOQ, because the unit price of the charge cable is very low, and the supplier’s profit will be very low when the number is too small.
But they tend to be more flexible in terms of minimum order quantities for raw materials and processing.
Therefore, if the customer raises the unit price for appropriate reasons, the supplier will accept a lower MOQ.
MOQ requirements usually, but not always, directly reflect subcontractor MOQ requirements.
Many Chinese manufacturers maintain “high turnover” material and component inventories. Therefore, at least if they want, they can produce a smaller amount of product.
But given their low profit margins, they are usually not worth the time, effort, and risk. Proposing to pay a higher price, such as 5% to 10%, may incentivize suppliers to accept small orders.
The above is the method and logic to solve the supplier’s objective problems about MOQ.
In addition, it is even more important for suppliers to be willing to work with you to find solutions to problems subjectively. The following are some tips to influence suppliers subjectively:
Don’t negotiate the MOQ at the beginning. Instead, you should let your suppliers know that you are serious about doing business with them.
You can start by introducing yourself and ask common questions about sample availability, prices, order delivery time, payment and shipping options, etc.
When you start the negotiation, show your confidence and strength, so don’t say that I don’t have a lot of money or I’m not sure if the product will be sold.
If you are a buyer looking for low-MOQ sellers on Alibaba.com, the Alibaba “ready to ship” section will help you.
Below is a brief overview on how to find a low MOQ wholesale distributor.
Generally, if you check the “Ready to ship” box, you will find that many products have a low MOQ and can be shipped within 15 days.
If you cannot find the product you want through these search filters, please increase your “minimal order” standard until you find a product that suits you.
Alternatively, you can also send a message directly to the supplier to see if this number has any flexibility.
Another option is to publish a public inquiry in the RFQ market for the exact quantity you wish to order. This way, the supplier knows the quantity you want from the beginning and can choose whether they fulfill the order.
The above are your tips for negotiating MOQ directly with the manufacturer. In addition, you can also choose to cooperate with other types of companies to meet your purchasing needs.
Below are three types of companies that can provide you with products and services when importing from China.
Reluctant to accept small orders or higher prices for small orders
MOQ can be adjusted.Multiple categories of products can be purchased at the same time
The price is expensive, they will earn about 30% of the price difference.Unstable quality
No after-sale protection
MOQ can be adjusted.Multiple categories of products can be purchased at the same time
Save worry, save time
Service fees will be charged, and commission may be recovered from the supplier. Price is not transparent
As we mentioned before, MOQ is affected by many factors. Therefore, we cannot show you the MOQ of each product in detail.
If you want to know the MOQ of your products in China, you can leave a message below and we will have a dedicated customer service staff to serve you.
If you want to find a China sourcing agent, you can contact us, With SourcingArts, You Don’t Have to Be an Sourcing Pro to Price Better And Genuine Manufacturer From China
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