What is MOQ: The Complete FAQ Guide

what is MOQ

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.

Keep reading.

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?

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?

MOQ

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?

It’s simple.

Just ask.

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.

Is there MOQ When Buying On AliExpress?

MOQ, which means minimum order quantity, is the least order quantity requirement on AliExpress.

Most sellers on AliExpress do not have MOQ. In fact, you can buy one item or as many as you wish.

No MOQ on AliExpress

No MOQ on AliExpress

Of course, this is not the case with Alibaba where suppliers have MOQ.

MOQ on Alibaba

MOQ on Alibaba

Why Do Manufacturers In China Set MOQ?

Just like any other company, China manufacturers’ main priority is to make a return on investment.

MOQ help China manufacturers to remain operational and make profits from their products.

Even for importers, you need to import a number of items from China to realize profits.

For instances, it is not economical to import one screen protector worth $0.5, then spend more to ship to your country.

For the manufacturers in China not to experience any losses, they will set an MOQ that will help cover the cost of manufacturing the item.

Can You Buy A Single Item On Alibaba?

Alibaba is a wholesale online marketplace.

Where you can buy products in bulk but at affordable rates.

If you wish to buy one single item on Alibaba, you will have to negotiate with the seller.

The negotiation’s main aim is to assess if the seller will allow you to buy one item.

One benefit of using Alibaba is that the marketplace gives you an opportunity to work in correspondence with the manufacturer.

For example, this seller alloys you to buy one swimming pool enclosure.

Low MOQ on Alibaba

Low MOQ on Alibaba

But of course of course the price of the item will determine whether you get lower MOQ or not.

Why Do MOQ On Online Marketplaces In China Vary?

There are few aspects that influences the disimarility of MOQ among online marketplaces in China.

Here are some of them:

· Type of Product

In most cases, cheap products tend to have high MOQ. For example, if the online marketplace sells pens, toothpicks, or matches, the minimum order might be 10,000 pieces or higher.

However, if the product is a bit complex and expensive, the MOQ might be lower.

For instance, machines, sofa sets or swimming pool enclosure have low MOQ.

You can buy a single set or item.

· Customization

There are a few online marketplaces that offer customization services.

Customization of products tends to require a lot of production time and high production cost.

Hence an online marketplace that offers customization is likely to have a high MOQ compared to those that offer standard products.

· Sellers Discretion

Remember, online marketplaces in China do not set the MOQ.

It is the sellers who set MOQ that is good for their business and customers.

How Do You Set Up MOQ?

Note that there is no standard formula on how MOQ ought to be set up.

This is because every business is different.

For the reason that every business has its own dissimilar needs.

Here are some guidelines that will be of help while setting up MOQ.

Assess your demand– with this, you must understand the product’s demand according to its seasonality, competition, lead time, and ship time.

Come up with a figure that will help you understand how much you need while trying to respond to the change of demand.

If the demand is high, the manufacturer will likely set up high MOQ, and vice-versa is true.

Determine carrying cost– Note that there are products you are likely to incur more while transporting them.

For example, there are products that require refrigeration whereas there are those that can do well while in the warehouse.

The manufacturer is likely to set a high MOQ for it to cover the holding cost.

Determine break-even-point– While assessing this factor, there is one major question that you ought to ask yourself before setting up the MOQ.

You should check how many products you ought to sell for you to recover the amount you spent while acquiring them.

This will guide you on the MOQ you ought to set for your business.

Are There Benefits Of High MOQ?

Yes, there are a few benefits of having a high MOQ.

Here are some of them:

  • Let’s say the raw materials you used were expensive or the staff-hours used in the production time were a lot.

Then having a high MOQ will be of help as it will cover the cost you used.

  • If the product you are producing is expensive and challenging to produce.

It will then make perfect sense to have a high MOQ as it will ensure that you do not incur any losses.

  • Having high MOQ helps weeds out retailers who are fond of bargaining.

It is better off to deal with a few clients who are willing to spend big.

However, if you repeatedly have to deal with clients who only bargain, chances are high, you will get your full profits.

  • Having a high MOQ will help you determine which business is willing to work with you.

Is MOQ A Requirement When Importing From China?

Yes, most manufacturers from China have an MOQ that need to be met.

Don’t get it wrong.

The Chinese Government does not stipulate the MOQ.

It is the product manufacturer or suppliers in China who set the MOQ for their businesses.

Is There MOQ For Amazon FBA?

Fortunately, there is no minimum order quantity with Amazon FBA.

Sellers are free to send out any order quantity requested by the clients.

You may order one single item without incurring any penalty.

Amazon FBA

Amazon FBA

How Does EOQ Compare To ROP? 

EOQ, which stands for economic order quantity, is the order quantity that decreases the ordering fee and total holding cost.

ROP, which stands for reorder point, is the minimum order quantity that a business should have in their inventory before deciding to reorder more items.

The difference between ROP and EOQ is that ROP helps the supplier know when to order new products.

Whereas the supplier uses EOQ to determine the order’s size.

Is There MOQ For Products Samples From China?

Yes, there is MOQ for product samples from China; however, the rates are meager. Most China manufacturers assume is that when you pay for the sample order, you are a serious client.

Most suppliers consider it as a milestone when a client pays for courier charges.

Of course, most Chinese manufacturers offer free sample.

However, there are agreements or terms for free samples.

Is There A Recommended Method Of Valuating MOQ For China Suppliers And Manufacturers?

There is no derivative method that you ought to use while evaluating MOQ for China suppliers and manufacturers.

This is because there are times MOQ is measured monetary value of order instead of units of goods ordered.

For instance, there are China suppliers or manufacturers that would only be willing to sell their products that total to a thousand dollars.

In this kind of case, the valuation of MOQ would be based on the actual value of the order and not quantity.

How Does High MOQ Compare To Low MOQ?

i. High MOQ

Low MOQ has a specific value to it.

This is not the same case with high MOQ.

Also, this is because the value varies with product types and the industry.

Most suppliers who set this kind of MOQ are the ones who are quite established in the market.

This kind of MOQ only permits patronage from just the top 20% of stores.

Again, this kind of stores are the ones that are usually on top of a cadre of consumers.

ii. Low MOQ

Low MOQ ranges from one to fifty units.

In most cases, suppliers who set this kind of MOQ are those are new in the market and wish to create a niche.

Suppliers who use this kind of MOQ may incur more loss as the break-even is not guaranteed.

However, the low MOQ guarantees to have loyal prospective clients.

But, this does not mean that the clientele cannot request some negotiation, as the manufacturer can set a value that suits both of them.

Note that MOQ differs with different stores.

However, your main priority should not to be MOQ while choosing a manufacturer.

Here are some of the things that you ought also ought to check:

i. Assess product safety

ii. The business’s track record- while checking this you should check on their delivery time and the kind of integrity the business holds.

iii. The kind of customer support system the manufacturer has to offer.

How To Find Chinese Suppliers With Low MOQ?

There are various strategies that can help you get Chinese suppliers with low MOQ such as:

  1. Have a direct conversation with the manufacturer- It is easier to have a good negotiation when you are directly communicating with the manufacturer instead of a third party.
  2. Check from various online marketplaces such as Alibaba, DHgate, Made in China, AliExpress, etc- Most of these online marketplaces tend to have Chinese suppliers.

The best part, suppliers offer varying MOQs depending on their business model.

  1. Compare various Chinese Suppliers- the good thing about Chinese suppliers is that most of them have flexible MOQ. By comparing them, it will help you find one that suits you.
  2. Try finding Chinese suppliers that are still new to the market. In most cases, such suppliers tend to offer low MOQ to their clients.

How Do You Meet The MOQ As A Small Business Importing From China?

As a small business, often than not you will need to start with a low order of products.

That is, if you have not yet established your niche.

If you wish to make imports from China, you will need a supplier that will meet your MOQ.

Also, if you wish to use a Chinese supplier with a low MOQ, your best option is to communicate with the supplier directly.

While conversing, ensure you state the number of units you need and what you can afford.

The good thing is that most Chinese suppliers tend to have different rates on their MOQ.

You can also use business directories to get more suppliers and manufacturers in China.

Can You Exceed MOQ Set By Suppliers When Importing From China?

Yes, you can exceed MOQ set by suppliers when importing from China.

MOQ set by suppliers defines the number of units they can supply at one time.

There is no problem if you exceed the set minimum order.

If you think you will exceed it, ensure you communicate with the supplier.

This will enable them to confirm if they have the materials to produce your units.

Why Should Wholesale Suppliers In China Have MOQ Yet Their Prices Are Low?

It is good to note that there are suppliers who will accept smaller orders only if price per unit is higher.

As much as the charges might seem very low, wholesale suppliers have MOQ to ensure their business remain profitable.

Apart From MOQ, What Other Products Ordering Constraints Are There?

MOQ is not the only ordering constraints that are notable; here are some of the other ordering constraints:

  • Lot multiplier- this is an ordering constraint that states that the units ordered by product ought to be a multiple of a specified integer.

The constraint often influences the choice of packaging.

  • Economic Order Quantity (EOQ) -In comparison to MOQ, which often reflects the supplier’s side of the experience.

EOQ reflects the customer’s side of the experience.

  • Price breaks- this is a reduction in price, especially on bulk orders.

How Can You Optimize An Order Under MOQ?

MOQ tends to complicate the ordering process.

This is particularly true as the purchaser has to assess the right amount to order while meeting the MOQ.

One strategy you could use if you wish to optimize an order under MOQ is to assess the economic return you will incur from every unit.

Secondly, you could filter out any quantities that are likely not to meet the ordering constraints.

While doing this, ensure that you rank these infeasible options corresponding to their rates of returns.

Note that doing this activity requires software that helps in the optimization of problems.

How Do You Evaluate Cost And Timeline of MOQ When Importing From China?

One thing you ought to understand is that the cost and timeline tend to differ with suppliers.

This is due to factors like materials, time, and cost for the overall production.

There are no particular rules when defining MOQ for the reason that it can range from one unit to a hundred at a time.

This is why you will find in some cases; some suppliers prefer having minimum price order instead of a minimum order of quantity.

If you come across such a supplier, you will have to figure out your budget before you decide to work with them.

They basically do this to ensure they make profits.

It gets better as there are suppliers who do not have an MOQ.

This can be helpful if you don’t the number of products you need.

Also, it will offer you an opportunity to test out their products before settling with the supplier.

While placing your orders, you will definitely realize that the more you order the lower the production cost.

This is possible because suppliers tend to make their products in bulk.

What Are the Benefits of Working With A Chinese Supplier With No MOQ?

When starting a new business, you may not have enough money to buy large quantities of products.

This is where the Chinese suppliers with no MOQ.

It is because you can order even small quantities to keep your business going.

It gives you the chance to test the product’s demand. This way, you will focus on products that buyers need.

You could also pre-order for clients as you will not be penalized for failing to meet any MOQ.

Making use of a Chinese supplier with no MOQ also allows you to test out the product.

You can make small orders to check if the products meet quality requirements.

From here, you will decide to buy in bulk or not.

Hence you are not likely to make any future business mistakes as you will only settle for a supplier that meets your niche.

At BanSar, we can help you get the lowest MOQ in China.

Talk to us today for best prices in China.

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