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One of the biggest margin-killers for online sellers comes in a risky minimum order quantity (MOQ). These high-limit MOQs can be especially scary for new or small businesses or for sellers launching a new product. Ordering a large amount of product could land you with unsold inventory and lost revenue while restricting your business’ ability to pivot.

 

But oftentimes, it feels like the best suppliers have a large minimum order quantity—and it may be an MOQ that you aren’t comfortable with.

 

How do you balance out the perfect supplier with the perfect MOQ?

 

Why Do Factories Have High MOQs?

 

A minimum order quantity is the lowest number of units that a supplier will produce per order.

 

Suppliers don’t have MOQs to make your life harder; they are just trying to protect their own balance sheets.

 

In order for the factory to stay profitable, they need to have a certain number of units per production run. It costs money each time they run their machines. The larger the production run, the less it costs them per product. Thus, factories prefer to produce large quantities at once.

 

Moreover, your factory may actually have their own minimum order quantity on the materials that they source for your product. They may have to buy certain materials from their sources in bulk. They don’t want to be left with a large stock of raw materials. Thus, they will use up that material and charge you for the corresponding quantity of goods.

 

It’s not always easy to meet the minimum order requirement. Firstly, it can be frightening to hold a lot of inventory without sufficient data to feel comfortable you’ll sell-through. Secondly, even if you knew that the product would sell-through 100%, as an individual seller or small business owner, you may not have the funds to purchase the MOQ of goods at that time.

 

In this way, a MOQ can become a significant risk to the success and growth of your business.

 

But you can mitigate this risk with the below tips.

 

1. Negotiate.

If you have a supplier that you love but the MOQ isn’t ideal, you can start with a negotiation.

 

First, find out why your company has that specific MOQ. This can help you understand what kind of solution will best work for both parties.

 

Then, propose a compromise. Possible compromises include:

 

  • Lowering the order quantity with a slightly higher cost per item
  • Lowering the order quantity and paying them a start-up fee
  • Giving the supplier a deposit for a large order but producing small batches at a time
  • Paying for the high MOQ in installments if don’t have the cash on hand
  • Asking if the supplier can group your order with another client with similar items

 

Many sellers feel uncomfortable or nervous negotiating down MOQs or settling on a contract agreement. You don’t have to do this alone. Ask Idea Sourcing provides price negotiation and contract agreement services to ensure you are paying the right price with the right MOQ.

 

2. Consolidate your parts.

The more common and standard your parts, the easier it is for factories to create. When making your product selections, consider products with simple parts or parts that can easily be standardized across multiple product lines. Oftentimes, different product lines with similar parts can count as a single MOQ.

 

For example, say you sell five types of T-shirts. The base of the shirt is all the same, but the main design is slightly different. You may be able to count all five lines as one MOQ if the primary production of the T-shirt is standardized and the factory only has to stamp on the final design at the end.

 

Even if you only have one or two product lines, standardized parts are still a plus. Your supplier may have other clients using those same parts, so they can offer you a lower and cheaper MOQ. Sometimes it actually benefits you to use a supplier that also sources for your competitors!

 

Ask Idea Sourcing can provide you with a product consultation to find a product with has standardized parts to work towards a regulated MOQ.

 

3. Absorb the cost.

If negotiations aren’t working, you may be able to pay a higher price per unit in exchange for a lower minimum order quantity. While this may hurt your margins in the short run, it can help ensure that you don’t have leftover, idle inventory. Oftentimes, it’s worth a few extra cents to make sure you sell through your inventory, especially when launching a new or unique product.

 

4. Look for flexible (legitimate) suppliers.

If your supplier won’t budge, you can consider finding a different supplier with a better MOQ deal. Generally, smaller manufacturers tend to be hungrier for your business and can give you a good deal.

 

However, you’ll want to watch out for scams. A low MOQ could mean that the product quality is low or that the “company” will take your money and run. Quality companies need a decent MOQ to ensure that they also make money. Scams make up arbitrary MOQs.

 

Avoid scams by working with a company like Ask Idea Sourcing. We partner with legitimate suppliers whose factories we’ve visited firsthand.

 

We can also help you negotiate your MOQs with these flexible suppliers. As your middleman, we work to find the perfect MOQ so both sides will make money and lower their risks. Request a quote now to start finding the perfect supplier with the best MOQ.

 

The Bottom Line

A high minimum order quantity can put your eCommerce company at risk for inventory mismanagement, lost profits, and unbalanced books. But it’s not always easy to find quality suppliers that will import small quantities.

 

That’s why you shouldn’t do it alone. Ask Idea Sourcing is your partner to get you the perfect product, supplier, and MOQ—all at the right price.

 

Request a quote now to grow your online business today.

 

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