MOQ is one of the major factors every importer considers when purchasing products from suppliers.
By the end of this guide, you will be knowledgeable on all aspects concerning MOQ when importing from China.
- What does MOQ mean?
- How do Chinese Manufacturers Calculate MOQ?
- Why is MOQ Important?
- Can MOQ Affect your Import Business Negatively?
- How does MOQ compare to EOQ?
- What are the Disadvantages of MOQ?
- How does MOQ Affect Price of Goods from China?
- Why do MOQ for Chinese Suppliers Vary?
- What is the MOQ for Custom Goods from China?
- How Can Business Importing from China Benefit from MOQ?
- How do you Negotiate for Low Minimum Order Quantity?
- What is MOQ in Supply Chain?
- What Affects MOQ in China?
- Why do Chinese Supplier Operate within MOQ?
- How can Small Business meet the MOQ?
- What are the Risks of Going for the Lowest MOQ?
- How can MOQ affect your Online Business?
- Are there Chinese Manufacturers with No MOQ?
- Why do Chinese Suppliers accept Low MOQ for Higher Price per Unit?
- Which Products have Low MOQ in China?
- What determines High MOQ for Products in China?
- How do you know MOQ for Chinese Suppliers?
- What is Minimum Order Value?
- Can you get Flexible MOQ Requirement in China?
- Can Buying below MOQ affect Quality and Cost?
- Between Alibaba and Factory; Where can you get Low MOQ?
What does MOQ mean?
MOQ refers to the least quantity of products that a manufacturer is willing to produce and sell at one time.
How do Chinese Manufacturers Calculate MOQ?
The cost of production for every single unit determines the MOQ imposed by Chinese manufacturers.
Why is MOQ Important?
MOQ is very important for every manufacturer.
It not only ensures that the cost of production is met but also manufacturers are able to make a profit and maintain healthy cash flow.
Most if not all Chinese manufacturers work on low-profit margins.
Therefore, they focus on bulk production in order to meet the time, cost, and energy utilized during the production process.
Can MOQ Affect your Import Business Negatively?
Yes, it can.
To start with, MOQ provides you with the cheapest possible price for a unit.
The more you purchase the best price you get for each unit.
Therefore, this might turn into generating huge profits in your business.
How does MOQ compare to EOQ?
Economic Order Quantity (EOQ) is also termed as the optimal lot size.
It refers to the order quantity that is used to minimize the total cost of inventory.
On the other hand, the Minimum Order Quantity is the least quantity of products that a manufacturer is willing to produce and sell at one time.
In a nutshell, EOQ mostly focuses on the customers-side friction while MOQ focuses on the suppliers-side friction of a particular order.
What are the Disadvantages of MOQ?
In as much as MOQ is advantageous it’s also disadvantageous.
The initial cost needed for the production of your units might seem high especially if it’s a new business.
For instance, a manufacturer proposes an MOQ of 900 pieces for $15 each.
This means that you will have to cough a whopping $13,500 which might exceed your budget.
In fact, this is one of the reasons why most first time importers shy away or are reluctant in their startups.
How does MOQ Affect Price of Goods from China?
The higher the MOQ the less the price of the goods and low MOQ equates to a higher price of goods.
Why do MOQ for Chinese Suppliers Vary?
There are a couple of factors that affect the MOQ for different suppliers not excluding;
- The type of product –Cheap items such as pens, pins, and matches normally have a higher MOQ as compared to items such as televisions and laptops.
Therefore, the MOQ will vary from one supplier of a specific type of product to the other.
- Quality of product – Suppliers producing high-quality items normally have a higher MOQ due to the higher cost of production incurred.
- Raw materials used –The subcontractors providing raw materials for the suppliers might have a high MOQ, therefore, compelling the supplier to increase their minimum order quantity.
- Customization – Suppliers receiving customized orders might have a higher MOQ owing to the higher production cost of custom parts not forgetting longer production time.
- Size of factory –Bigger and established factories offer higher MOQ as compared to smaller factories. This is due to the higher number of orders and production cost and therefore a lower MOQ would be unsuitable and unworthy for such suppliers.
What is the MOQ for Custom Goods from China?
The MOQ for custom goods varies from one supplier to the other.
In addition to that, the MOQ for custom made products is usually higher as compared to other products.
Most of the suppliers opt to have an MOQ from 1000 units for every custom goods.
Remember, you can as well try to negotiate with your supplier and therefore this is not a fixed amount.
How Can Business Importing from China Benefit from MOQ?
MOQ allows businesses to purchase products at relatively lower prices and therefore increasing the profit margin for businesses.
In addition to that, an MOQ provides the buyer with an opportunity to test the products before purchase.
As a result, reducing any risks regarding the quality and safety of the order.
How do you Negotiate for Low Minimum Order Quantity?
MOQ for different product on Alibaba
Most suppliers are normally reluctant when it comes to lowering their MOQ as they want to maintain their profits and ensure that there is steady cash flow.
However, this doesn’t mean that you shouldn’t try to negotiate.
As compared to suppliers from other countries, some Chinese suppliers are quite flexible when it comes to lowering MOQs.
To achieve an effective negotiation, ensure that both parties are safe.
Meaning the supplier will not incur any losses as a result of lowering the MOQ.
You might as well consider proposing any of the following in a bid to get your supplier on board;
- A long-term commitment
- A higher price per unit
Nevertheless, never rely so much on this rule of negotiation of MOQ with your supplier.
What is MOQ in Supply Chain?
The Minimum Order Quantity refers to the least amount of products that a manufacturer is willing to produce and sell at a particular time.
What Affects MOQ in China?
The Minimum Order Quantity is affected by factors such as;
- Customization- Customized products attract a higher MOQ and the more the customization the higher the MOQ gets.
- Size of the factory – Often, bigger factories only deal with bulk purchases and therefore have a higher MOQ as opposed to smaller factories.
- Raw materials used – The subcontractors that provide raw materials for suppliers might impose high MOQ on the raw materials thereby compelling suppliers to raise the MOQ of the final product.
- Type of product – You are bound to come across higher MOQ for cheap and simple items such as pens, pins, matches among others as compared to products such as laptops and bags. Chinese suppliers work within a narrow profit margin and therefore to attain profits for smaller items they will have to produce several of them. Remember, all suppliers are aiming to maintain profits and cash flows for their businesses.
Why do Chinese Supplier Operate within MOQ?
Minimum order quantity
Operating within MOQ enables Chinese suppliers to stick to steady cash flow as the MOQ covers the production costs.
Additionally, the suppliers are able to control the costs associated with warehousing as they keep stock of their goods while at the same time maintaining business profits.
Not forgetting that most manufacturers purchase and produce their raw materials in bulk and therefore anything less than this might drastically affect their operations.
How can Small Business meet the MOQ?
Small businesses might feel left out when it comes to negotiating the MOQ with suppliers. Nevertheless, here are some tips that small businesses can implement when trying to get their supplier to agree to reduce the MOQ.
- Raise the price – As I mentioned, most suppliers are in a bid to maintain their profits no matter what. That said; make sure that your proposal feels comfortable for both parties. By raising the cost, there’s a higher chance that your supplier will be willing to lower their MOQ.
- Purchase from smaller factories – As compared to big factories smaller manufacturers are more likely to have lower MOQ as they deal with smaller purchases too.
- Try negotiating – Yes, negotiating works. And how it works depends on how you convince your supplier that by lowering their MOQ they will still maintain their profits and that you are a serious buyer.
- Ordering during the low seasons also could make a difference in the amount of MOQ you will be offered by suppliers.
- Engage in joint orders – By this, I mean joining heads with other similar importers and ordering the items as one from your supplier without compromising the price.
- Pay in installments – The total MOQ might seem quite huge for smaller businesses and therefore by paying in installments the burden is eased. Keep in mind not every supplier will agree to this therefore you need to enquire and negotiate with your intended supplier.
What are the Risks of Going for the Lowest MOQ?
Negotiating for a lower MOQ is not always the ideal option to settle for owing to the following reasons;
- Low quality – Often, a low MOQ will compel the supplier to produce products at the least cost possible which might tamper with the general quality of your goods.
- Poor safety of the product – A low MOQ might as well compromise the safety of your products as the supplier will be focusing on producing at the least costs.
- A low MOQ would also mean poor customer care and support as compared to higher MOQ.
How can MOQ affect your Online Business?
MOQ might be a limiting factor for new online businesses in a manner that not all suppliers will be willing to lower their MOQ in order to fit in the buyer’s budget.
Therefore, online businesses will have no option but to search for smaller retailers.
These smaller retailers provide lower to zero MOQ and higher prices per unit in order to cover the overall production costs.
Are there Chinese Manufacturers with No MOQ?
Yes, there are.
However, keep in mind that many of these suppliers offering zero MOQ are not the actual manufacturers.
Most of them are wholesalers providing goods for the local market and therefore the products might lack proper safety standards and labeling requirements.
Why do Chinese Suppliers accept Low MOQ for Higher Price per Unit?
The reason why most if not all Chinese suppliers will require you to raise the cost per unit.
That is, if by chance you want a lower MOQ is that they want to maintain their profits and ensure that there is steady cash flow.
Lowering MOQ affects the production cost and therefore by raising the price per unit they are able to cover all costs incurred during the production process.
Which Products have Low MOQ in China?
Pricier and larger items always demand a lower MOQ as compared to cheap and smaller items such as pens.
This is because most Chinese suppliers work within narrow profit margins and therefore they constantly need to produce more products to achieve the desired profits.
For that reason, producing fewer cheap items would be a total loss to them.
What determines High MOQ for Products in China?
Higher MOQ will be determined by the following main factors;
- Size of the product –Often, smaller and cheap products will have a higher MOQ as compared to larger and pricier ones in order to cover the production costs and maintain profits.
- Customization – The more customization your products need the higher the MOQ. Keep in mind that with customization, the supplier needs to purchase specific materials that might already be subjected to higher MOQ, and additionally they might require special production process. All these might need the supplier to adjust some operations to accommodate your order and this finally equates to a higher MOQ for customized orders.
- Sizes of the factory – As compared to smaller factories, bigger factories normally have a higher MOQ. This is due to their bulk purchases and bulk production of goods.
How do you know MOQ for Chinese Suppliers?
Enquire from your supplier and find out their MOQ for your products.
Thereafter you can choose to negotiate and come to a mutual agreement.
What is Minimum Order Value?
Just as the name implies, Minimum Order Value refers to the smallest number of items that can be ordered at a given time for a single delivery.
Can you get Flexible MOQ Requirement in China?
Yes, you can.
As compared to suppliers from other countries, Chinese suppliers are quite flexible when it comes to MOQ requests.
Some are willing to lower or negotiate their MOQ for their serious clients thereby accommodating the smaller businesses as well.
Can Buying below MOQ affect Quality and Cost?
Yes, it can.
In as much as purchasing below MOQ might sound attractive due to the lower costs, it’s not always a wise idea.
Most of the products might turn out to be of lower quality.
Not forgetting that the safety and labeling requirements might as well be compromised in a bid to lower production cost.
Between Alibaba and Factory; Where can you get Low MOQ?
Since most factories deal with bulk purchases it might be quite challenging to get a low MOQ in factories as compared to Alibaba.
In Alibaba, you will find MOQ ranging from as low as 10 -20 pieces.
However, you need to keep in mind that these are mostly wholesalers who provide the goods to the domestic market and this could mean that safety and quality standards are compromised.
Nevertheless, there exist plenty of suppliers willing to offer low to zero MOQ, and it’s up to you to do your research thoroughly.
Make proper use of Google and other online B2B platforms to gauge the different suppliers available.
At BanSar, we can help you get the lowest MOQ in China.
Talk to us today for best prices in China.