If you are a new businessman or you are running a small business, especially an e-commerce business, MOQ is important to you. You may need to diversify your products to test them in the market before you choose one product to run. Or you want to run a product with many SKUs, such as various colors, various models and sizes, etc. But the supplier will set MOQ for each SKU. since you lack abundant capital, you will have a lot of financial pressure caused by upfront investment.
A healthy cash flow is critical to your business. It is important to get a proper MOQ from your suppliers, otherwise, your business will be seriously affected by a large amount of inventory in the early stage of your business. Many small businessmen usually have the idea that they want to get a low MOQ at the lowest price. this is completely wrong.
In my today’s blog, you will learn about，
- What is MOQ definition? Why do wholesale suppliers/ factories set MOQ?
- Whether MOQ is good or not, if not, how to overcome it?
- For some daily goods, what are the MOQs of different suppliers?
- How to negotiate lower MOQ with suppliers? (5 practical tactics), What if you fail?
- MOQ analysis in different kinds of some daily goods.
Without further ado, let’s jump into the article, I bet you’ll benefit a lot!
1. What is MOQ meaning? Why do wholesale suppliers/ factories set MOQ？
What is MOQ definition?
MOQ is short for “Minimum Order Quantity”, which means the least amounts of products that a manufacturer is willing to produce or the minimum quantity that a wholesale supplier is will to sell. In real business, if you want mixed batches, many suppliers will convert MOQ into a certain amount of money. For example, a led lights supplier will allow you to purchase their products unless your order reaches $1,500 regardless of styles.
Why do wholesale suppliers/ factories set MOQ?
Unlike retailers and dropshippers, as wholesale suppliers or manufacturers, they make money by selling products in bulk. That is because the profit per unit is very low. As manufacturers, the most important reason for setting MOQ is to cover their cost of production. If quantities are too small, it is difficult for them to operate the production line and purchase certain quantities of raw material or packaging material.
We are a pillow factory, and specialized in manufacturing memory foam pillows. our MOQ is at least 2000 pieces. As the product was made by pillow mold, which is made by mold factory. And the cost of the mold is very high, once we operate the machine, 2000 pieces are the least quantities needed to cover our cost and make a profit.
So, if your quantity is just several hundreds or thousands, it is the best choice for you to purchase existing products from wholesale suppliers instead of manufacturers.
Suppliers such as trading company or wholesalers, they’re acting like a middleman, the 2nd middleman or distributor. Their MOQ depends on the condition that they buy products from factories.
For example, as a small-scale wholesaler, they can get goods from factories in small quantities or the factory they cooperate with is small-scale. MOQ of such suppliers might be lower. On the contrary, for capable trading companies, they can purchase large quantities of products from factories at a lower price. Hence, the MOQ will be higher accordingly. But MOQ varies greatly in different product categories, I will analyze it below.
But in some special period, some manufacturers will also increase their MOQ temporarily to orient their target customers. For example, Dasheng, one of the few manufacturers with NOISH N95 mask production qualifications, adopted the approach during the period of Coronavirus. As they received many inquiries about N95 masks every day, however, some inquiries are true orders, and some are fake inquiries. Hence, they increased their MOQ to $1,000,000.
In a word: all types of suppliers set a MOQ to meet their threshold.
2. Whether MOQ is good or not, if not, how to overcome it?
It’s hard to say whether MOQ is good or bad; it’s the subjective opinion of the supplier or buyer.
For suppliers, they want you to buy as much product as possible. But on the contrary, buyers will hold a different view on MOQ. This is not friendly to those small businesses or some startups.
In order to comply with the supplier’s MOQ, the purchaser will have a large amount of inventory, perhaps indigestible in the short term, which will lead to a higher investment risk. In addition, there are limited styles for you to choose from. For example, you intend to buy 3500 pieces of 10 styles. But once the supplier sets the MOQ for each style, maybe you can only buy 4 styles or even less.
Therefore, I suggest our clients who run Amazon business to choose some essential products with fewer SKUs to run their business, such as pulley sets. Such products only need to have 5-6 models. By doing so, the immediate benefit to them is that it will relieve the inventory pressure because they don’t need to prepare inventory for many SKUs.
An Amazon seller, a client of mine, wanted to sell clothes for flowering girls on Amazon. Asked me to help him find a children’s clothing factory to work with. After that, he chose 5 styles of flower girl dresses, each style has 7 colors and 8 sizes. Suppose he wants to have 30 pieces in stock, how many dresses does he need to buy? That would be 5*7*8*30=8400, right?
So, as a new business, especially an e-commerce business, when you choose the best industry you want to operate in by comparing different product industries, there will be fewer choices within your budget at the beginning of your business because of the MOQ.
When you are running your business smoothly, or you can determine which products will be stable and profitable, you can get goods from manufacturers with large MOQ at lower prices, which is usually lower than buying products from wholesalers. Then your products can be more competitive in the market.
Or you can choose to carry customized products. Usually, for some custom products, manufacturers need to invest more money to make the molds. Therefore, fewer importers will choose to customize their products because of the large investment. The immediate benefit to you is that you will be more competitive in the market for such products.
3. For some daily goods, what are the MOQs of different suppliers?
MOQ varies from different types of suppliers. I will list some MOQ information in the following chart for your reference. (mainly analyzing from daily necessities)
Supplier TypeAverage MOQSmall manufacturers$1000-$2000Medium-big manufacturers or famous brand OEM$3000-$5000 Alibaba suppliers（include other China B2B sites）$500-$2000Canton Fair$2000-$5000Wholesale market$100-$200 for existing styles; $2000 for customized stylesDhgate, AliexpressDozens of dollars
Showing 1 to 6 of 6 entries
Then I’ll tell you some practical tactics to help you choose the right suppliers according to your business mode.
As I mentioned at the beginning of the article, many small businessmen or startups may have a misunderstanding that they can purchase from factories to get the best price. However, in real business, you’ll never get a low MOQ at the lowest price.
Hence, if you are new to e-commerce business, you couldn’t take a risk of holding a large inventory. But you need products to operate market tests, then a small factory, a reliable wholesale supplier or even a dropshipper is your right supplier option. As you can get small MOQ from such kinds of suppliers. You can find such suppliers from Alibaba, Made in China, Globalsource, DHgate or AliExpress easily.
After your business can work steadily, you can accept higher MOQ, and then you will be able to choose a direct factory to cooperate with. After all, many wholesale suppliers or dropshippers usually go to many different factories to purchase the same product. Hence, the product quality cannot be guaranteed. It is not beneficial to your long-term business.
4. How to negotiate lower MOQ with suppliers? What if you fail?
In this most important section, I will teach you how to get lower MOQ from suppliers, and how to deal with it if you can’t get lower MOQ. Some startups will be discouraged by the suppliers’ MOQ. Actually, MOQ usually can be negotiable, but the premise is that it should meet the suppliers’ profit margin.
5 practical tactics to negotiate MOQ with suppliers:
The following 5 tactics are precious experience I seldom share with others, and you should bear them in your mind. Why I call it “tactic”? MOQ negotiation is a soft skill to get a win-win solution, just like a business game between you and your suppliers.
Communicating with suppliers frankly and sincerely
Many e-commerce courses will teach you a solution, which means you can pretend to be experienced or a veteran. For example, if you negotiate a unit price with a supplier for a quantity of 10,000 units, but in reality you only want to buy 1,000 units in the end. I don’t think such an approach is useful. Because suppliers are in contact with many different purchasing people, they can easily identify whether you are a veteran or a novice.
On the other hand, many Chinese suppliers are willing to reduce the MOQ to a certain extent in their first cooperation with you. of course, the MOQ should also be within their cost control. But if you take such an approach, they will think you are not a reliable partner.
Therefore, you can tell the supplier that this is your first order of this product. You want to place a small order to test the market with an order size of about 30-45% of the MOQ. But the supplier may end up quoting 10%-30% higher than the previous unit price. Of course, if you think it’s okay, you can place the order.
If the supplier is not willing to lower the MOQ to a certain level, you can try the next move.
Consider and communicate with suppliers from their perspectives
Many people won’t consider problems from the opposite party’s standpoint, remembering it, business is always built based on the win-win cooperation. You shouldn’t let suppliers compromise unilaterally. You can say some words to let suppliers think you can understand his difficulties. Besides, you can tell them that they won’t lose money from the business with you. And you want to build a long-term business relationship with them.
At the same time, you can communicate with suppliers about your business mode and situation. For example, if you are an Amazon seller, you can tell them why you will choose this kind of product, your marketing plan, advertisement budget and so on. It is enough for you to be sincere rather than show how professional you are.
Exert a certain pressure on suppliers
After the above two steps, you can tell them one thing: despite they are the best suitable supplier for you, but you also have other suppliers to choose from. If they couldn’t meet MOQ you propose, you will give up them and find another supplier to cooperate with.
Don’t act like you’re rushing to place your order, just wait
You can tell them that they can consider if they can decrease MOQ and tell you the result in about 2-3 days. During the period, you should wait for the suppliers’ reply patiently without urging them.
Negotiation on other expenses
If suppliers still think it is not worthwhile for them, you can communicate with them to know what difficulties they have.
- Costs on starting the machine
Just like the menstrual period underwear factory I mention in the above, the cost for starting the machine is very expensive. It is not worthwhile for them to start the machine unless the product quantities reach 20,000. Hence, if suppliers tell you that the cost for starting the machine is very high, you can tell them you are willing to undertake a certain proportion of the costs.
- Specific components
If you want to customize products, the possible reason for them to set high MOQ is that they need to purchase specific partial parts to customize products or they need to make a new mould. Under such a circumstance, you can offer to pay for partial parts or undertake costs for mould making.
- Increase your prepayment proportion or even full payment immediately
The common payment method is 30% prepayment when you place an order, and 70% balance after you receive goods. And you can propose that you are willing to arrange 60%-70% payment or even full payment immediately, which will let suppliers think you want to cooperate with them sincerely.
What if you fail?
The key to negotiate is the price you can accept, or a balance point between you and suppliers. If you cannot make a deal, you can try another way. For example, if you are a newbie and need products to operate the market test in advance, you can cooperate with relatively small-scale suppliers at first. And after your business develops steadily, you can find another medium or large-scale supplier to cooperate with. After all, it is a truth: Rome is not built in a day.
Caution: when you negotiate with suppliers, you had better not let the negotiation end unpleasantly. That is because you may negotiate with them again in the future.
5. MOQ analysis in different kinds of some daily goods.
Actually, I want to show you a chart including MOQ in different industries as many of my overseas friends also ask me if I could provide such information to them. But in fact, as there are great differences in different categories’ production processes, material cost, labor cost and so on, and I can’t give you a concrete MOQ range.
But our sourcing specialists often help our foreign friends to negotiate MOQ, so I list some common products’ MOQ information we dealt with before for your reference as follows:
Products name Average MOQ (pcs)
Ranges from 100-500Socks
50 for existing styles; 300 for customized stylesCustomized diaper bags
Ranges from 500-1000Customized wooden chairs
Several dozens for existing products; MOQ varies widely for customization productsCustomized micro paving fashion jewelry
100-350Plastic toys & high-tech toys
Tens of thousands for plastic toys; dozens for high-tech toysGlass cosmetic bottle
10000 for customized stylesVacuum cups
200-300 for existing styles; 500-1000 for customized; 3000 for moulding cups;
Showing 1 to 9 of 9 entries
You may ask me such questions:
- Why do customized products have higher MOQ than existing styles?
- why do glass articles, plastics articles, or vacuum cups have such high customization MOQ?
Why do customized products have higher MOQ than existing styles?
Product customization involves many aspects, such as adding a logo, changing color, parts, material, or design and so on. Accordingly, manufacturers will invest extra labor and money in preparing material, making mould. Hence, MOQ is undoubtedly higher.
If you just want to make a simple change on the existing styles, such as printing your logo or just replacing an accessory, it is not time-consuming or very complicated operations for manufacturers. Hence, under such circumstances, manufacturers will not increase their MOQ sharply.
But if you want to buy brand new products you design, or production involves a time-consuming and complex process, or making a new mould. MOQ will be higher for such products.
Why do glass articles, plastics articles, or vacuum cups have such high customization MOQ?
For such kind of articles, usually they need to make mould and it will take manufacturers a large sum of money to make a mould accordingly. Even for a small lid, its cost reaches up to about $430-$1,000. Hence, low MOQ may appear nonprofit for factories, and they must increase their MOQ to meet their profit margin.
I want to hear from you
When it comes to MOQ, it may be not easy to find a vendor that meets your pricing and quantity requirements. But rest assured. There is always a supplier that satisfies your needs.
Don’t regard the lowest MOQ as the only aim, the key is that the price and MOQ of the supplier you choose to cooperate with are within your budget range.
We have helped many e-commerce businessmen, like Amazon sellers, retailers in Google. And we are willing to try our best to support them as we can understand their hardships along the way. If you have any questions about MOQ or you want to import pillows from China, let me know by leaving comments below, or feel free to contact us.