Best China Sourcing company
That Drives Profit Growth
How to lower the MOQ of China suppliers? （6 Tactics)
MOQ can be a hassle for a start-up business or e-commerce entrepreneur.
As we all know, China’s cheap labor and abundant raw materials have made China the “workshop of the world.” This has attracted a large number of overseas customers to purchase from China. “Made in China” has created numerous successful cases. But for entry-level or cash-strapped buyers, sourcing from China is not so easy.
First of all, MOQ is a threshold that buyers have to cross.
Often, suppliers set a MOQ for each SKU, especially on sites like Alibaba and Global Sources. These platforms are B2B models, so the MOQ is usually high. This means that you have to purchase a lot of the same product at once, and even if you purchase more than one SKU, the MOQ will not change much.
Adequate cash flow is critical to the buyer because in addition to paying for the purchase, you have to set aside enough money for the marketing later. So, getting the right MOQ early on is even more important to you than the purchase price. Don’t ask for low prices and low enough MOQ. But don’t worry too much, it’s possible to lower a vendor’s MOQ with a few tricks.
Here’s what you’ll learn in this article:
What is MOQ? Why do sellers set MOQ?
MOQ is the abbreviation of Minimum Order Quantity, which refers to the minimum production quantity or delivery quantity that the supplier is willing to undertake when placing a single order with the supplier. MOQ is usually formulated by the manufacturer or distributor of the product, in order to ensure that they can ensure their own profits every time they produce or sell. It can be a quantity or an amount. For example, a supplier’s MOQ for an SKU headset is 1,000 pieces or $3,000.
How do we check the MOQ of a product on a B2B platform?
For example, the following figure shows that the supplier’s minimum order quantity for this watch is 1pc. Of course, this is not the supplier’s real MOQ. Just as suppliers will always present low prices on B2B platforms to attract buyers, they will also present their MOQ as very low on B2B platforms.
This MOQ is not the real MOQ, it means that 1PC sample can be provided, and the purchase of 1-200PCS is only for the supplier’s stocks. This means that the buyer cannot have any design for the purchase of less than 100PCS. As for the real MOQ, you can only get it through detailed inquiry. And you must express your custom requirements clearly when inquiry, otherwise you will not get the most accurate MOQ. For example, the MOQ of the blister case is not the same as the MOQ of the color box, and the MOQ of the silkscreen LOGO and the embroidery LOGO is not the same.
Because different manufacturers use different materials and are located in different regions, their material costs, labor costs and even water and electricity costs will vary, so the amount they can accept in the formulation of MOQ is also varied, from 100,000 to 100, which is possible.
In short, the MOQ shown on the B2B platform cannot be fully believed. Only through the specific inquiry with the supplier can we get the real MOQ.
Why do suppliers set MOQ?
In order to negotiate with the supplier, we need to know the supplier’s psychology first. Why does the supplier set MOQ? Is it just to increase sales and make money? It’s not just.
Generally, the MOQ depends on the cost required by the supplier for production, which includes not only the labor cost and material cost, but also the cost of opening the machine, and even other special costs, which are not only complicated and time-consuming, but also higher overall cost. For an order, the supplier is willing to start production only if the order quantity exceeds MOQ. Because the production volume is large, the cost of each product will be reduced, so the unit price provided by the supplier is usually the most favorable.
A product is usually completed by many suppliers together. Generally speaking, there are at least4 suppliers of a product: the raw material supplier, the packaging material supplier, the printing factory and the assembly workshop. Because factory production lines in China are relatively single, factories are usually very focused on one area. For example, the supplier that makes the color box will not supply the raw materials. This means that the MOQ of the product is decided by the 4 suppliers together. The buyer is generally in contact with the assembly workshop(that is our suppliers), and what often limits MOQ is actually raw materials and packaging and customized LOGO. There is also a MOQ for assembly workshops to purchase raw materials or to purchase packaging materials.
In addition, the factor that affects MOQ is the cost of machinery in the factory. Opening the machine once requires a lot of raw materials to wash and debug the machine, so the factory will not start the machine when the order is too small to cover the cost of the factory.
How does MOQ help buyers?
MOQ is not all bad news for businesses. Generally speaking, when placing an order based on the quantity set by MOQ, the unit price of the product will get a relatively large discount. Some suppliers can either wholesale according to the initial order, or retail in smaller quantities according to the customer’s requirements. In this case, the wholesale price of the product is generally lower than the retail price, and the larger the wholesale quantity, the lower the price of the product is likely to be.
This means that buyers can make more profit on a single product, or they can make more profit on the condition that the total sales volume does not change, or they have more profit space to gain a better price advantage, increase sales volume and make profits.
How to lower MOQ?
Don’t believe too much about the MOQ that the supplier told you for the first time. The supplier certainly hopes that you can order 5,000 units, but everything is not what it looks like on the surface, you can negotiate. You will be surprised to find that in most cases, you can easily reduce 30% of your MOQ, and sometimes even more if negotiated properly. Of course, some suppliers are unwilling to negotiate, but most of them are willing. Remember, they want to do business with you-so don’t be scared off when you see a high MOQ.
When negotiating with a manufacturer for MOQ, you must have a realistic grasp of the numbers. If the budget allows, it is possible to reduce the MOQ from 1000 units to 250 units, but reducing it from 1000 units to 25 units is not easy. Of course, you can try, but don’t hope too much.
After understanding the real reason for the supplier’s setting of MOQ, you can negotiate with the supplier. To be honest, this is psychological warfare. Even if you fail to negotiate in the end, you can test the supplier’s bottom line. Regarding the MOQ negotiation activities, the ultimate goal is only one, try to find a minimum amount that you can afford and the supplier can also accept. Below I will show a few negotiation skills in the following story scenarios to help you lower the MOQ.
Story background: Sam sells mobile phone accessories in Canada. Recently, according to his research on the local market, he found that a smart bracelet is very popular in Canada. Sam analyzes that the profit of selling this bracelet is considerable. Sam felt this was a great business opportunity. After a week of investigation and comparison, Sam finally found a Chinese supplier that looked reliable on Alibaba, so Sam negotiated all the product details with the supplier with full sincerity.
There’s just one problem they haven’t been able to agree on. The supplier’s MOQ for this customized black smart bracelet is 2000 pieces, but Sam has limited working capital at present, so he hopes to purchase 200-500 pieces first. It is to test the market first on one hand, wait for capital turnover on the one hand.
Experienced people all know that it is very difficult to ask the supplier to reduce the MOQ, so what should Sam do?
Sam: Canadian buyers
Candy: Chinese supplier, foreign trade salesman with 5 years experience.
Place a sample order
Candy: Hi, Sam. For this new style of bracelet, our MOQ is 2000 pieces. Because there is also a MOQ for us to purchase raw materials, hope you can understand.
Sam: Candy, I understand. There is no problem with the MOQ of 2000 pieces for the formal order. But before placing a formal order, I need to place a trial order of around 200 pieces to test your product quality and market response.
Candy: Oh, that’s too far from our MOQ. We can’t purchase raw materials.
Sam: I really want to cooperate with you. Could you arrange the purchase of raw materials with my order and other orders? Looking forward to your good news.
Candy: I have negotiated with our production department. We will indeed purchase a batch of the raw material of this bracelet next Wednesday for other orders. But for 200 pieces, we cannot customize the LOGO. Printing LOGO needs to develop film, and the machine cost is very high, if the quantity is less than 2000, we can’t start the machine.
Sam: Products without my logo can’t be accepted. How much would it cost to print 200 logos separately?
Candy: I need to check this with the engineering department and will get back to you as soon as possible.
Sam: I’m fine with a formal order, but I just need to place a test order.
This is easier for suppliers to accept than placing a small order directly. In fact, this is to tell the supplier that I am a potential customer, so that the supplier is more willing to compromise.
The supplier will attach importance to those potential customers. For major products, suppliers usually stock up on a regular basis because they must have some regular customers. So new buyers can use this to convince suppliers. For additional customization requirements, you should use your communication skills to build a good relationship with the supplier. Usually, it’s not impossible for the supplier, it’s just a matter of whether the supplier wants to do it or not. If the supplier is willing, you only need to pay an extra fee for customization (usually not much).
Although printing factories also have MOQs requirements for suppliers, the Chinese are very “guanxi” oriented. The supplier usually has a printing factory with long-term cooperation. As long as the supplier is willing to talk to the printing factory, it is very easy to reduce MOQ. But you must let the supplier see your sincerity and potential, otherwise, the supplier won’t willing to negotiate with his supplier for you.
Pretending to be a “first-time buyer”
Sam: Candy, I have received your quotation, but this is my first time purchasing from China. The MOQ of 2000pcs is too high. It’s too risky for me. I’d like to start with 500pcs.
Candy OS: 500 pieces? Are you kidding us?
Sam: I know that this quantity is less than what you expect, but I promise that next time it will not be this quantity. I believe this kind of bracelet will sell like hotcakes, and we will have more cooperation opportunities in the future.
Candy: [Thinking for a moment] Well, since this is our first cooperation, I can help you to apply to our manager for a reduction in MOQ to 1500 pieces.
Sam: OK. Thank you very much for your help. But I need to discuss it with my partner.
(10 minutes later) I have discussed with my partner, we can start our cooperation from 1000 pieces at most. If the cooperation goes well, we would like to establish a long-term relationship with you. In addition to smart bracelets, we will also purchase many other products from China.
Candy: Ok, I got it. Let me check
Sam: We’d love to cooperate with you, but if that’s not possible, we’ll have to find other suppliers
Candy: [Compromise] OK, we will make an exception this time to reduce the MOQ to 500pcs, but the price will rise a little. Because the quantity is less, the unit price of some materials will go up.
Sam: It’s Ok, please send me the updated quotation. Thanks
Suppliers usually set MOQ higher in the first quotation, because this will help them to raise prices later. When you say that you want to reduce the quantity, the supplier must say “The quantity is reduced, the average cost of the product will rise, so the price will be more expensive.” In this situation, the first thing you need to do is to lower the MOQ. , And then negotiate the price slowly.
Order products that have already been produced
Sam: Hi Candy, the MOQ of 2000 pieces is too high. Would it be possible for us to order 500 pieces first?
Candy: We follow the policy of small profits but a high turnover. If the MOQ is too low, we will lose money.
Sam: Let’s meet each other halfway. How about we order 1000 units first
Candy: I’m very sorry, orders below 2000pcs can’t be considered.
Interior monologue: Now is the peak of orders, small orders can not earn much money, and it will delay our schedule.
Sam: OK [ took a look at the supplier’s website and found a bracelet very similar to the one purchased by Sam] I wonder if you have this kind of bracelet in stock?
Candy: [Thinking] What a coincidence! We happen to have a stock of 455 pieces, also made last month, but only in blue color.
This is the product picture, which is similar to the one you want to purchase.
Sam: OK, let’s start with this stock item.
Please send me a quotation.
Candy: OK. I’ll send it to you right away.
If you follow the above points, then you can reduce the MOQ by at least 30%. But also remember that you can never order a product with a quantity lower than MOQ at the lowest purchase price. Therefore, sometimes it is not worth ordering products in small quantities, because when all the costs are added up, you may have to pay a fairly high price.
It’s very similar to “Ready to Ship Goods” on Alibaba. When your budget is not enough, you can also choose to purchase products that the supplier already has in stock. There are no MOQ restrictions for these products. Usually, factories produce only when there is demand for an order, but sometimes orders are temporarily canceled or production is too high. In this case, you can usually use the suggested minimum order quantity for the purchase of the product because the manufacturer wants to sell the product as soon as possible. The downside is that you can’t have your own design. According to our experience, it is possible to customize the logo for some simple finished products. If you are willing to pay additional labor costs and printing costs, suppliers may also accept. In short, everything is negotiable.
How to use Ready to ship?
This is more like a B2C area on Alibaba, where sellers can wholesale some products stocked in small quantities. If you want to buy a small number of products on Alibaba to test, you can select products marked by Ready to Ship.
Ready to ship means it’s a product that the supplier already has in stock, so you can buy it in small quantities. But basically, you can’t customize your logo. The price is usually more expensive when you buy smaller quantities, and you have to pay for expensive shipping. In this way, the price of Ready to Ship is essentially equal to the retail price of the product.
But if you really want to purchase a small amount of product from a supplier to test the market and product quality, this is a good option. If you have a long-term purchase in mind, remember to ask the supplier if the product is available for the long term before buying. Because some products that are ready to ship may also be slow-moving goods by the company, the supplier may not stock them after clearing out the inventory.
When using these three methods, you can combine them with some other negotiation techniques that will greatly improve your odds of success.
Think from the supplier’s point of view
Many people don’t look at things from the other side, but business is always based on win-win cooperation, and you should not allow suppliers to compromise unilaterally. You can put yourself in the other person’s shoes and make the supplier think you understand his or her difficulties. You should make it clear to your suppliers that they will not suffer from your business.
Tell them you want to build a long-term business relationship with them and communicate your business model and situation. For example, your marketing plan, advertising budget, etc. A good salesman will determine whether you are a potential customer. Be sincere and don’t blindly show your professionalism
Put pressure on suppliers
When you enter the negotiation, you must make it clear to them that while you think this supplier is the best fit, there are other suppliers you need to consider at this time. If they can’t meet your MOQ, you’ll have to find another supplier. Give the supplier 2-3 days to think about it. If the other party is just an employee, there is time to ask the boss and give you a specific answer.
Modify other conditions
Maybe some manufacturers are still not willing to supply you with products based on your MOQ. However, they are not necessarily unwilling to cooperate with you, but they cannot accept the MOQ. At this point, you can proceed with negotiations if the other conditions change slightly. It depends on which of the following difficulties the manufacturers are having:
Machine start-up cost
If the supplier says the problem is the start-up cost of the machine, you can tell them that you are willing to share some of the cost.
This shows that you are flexible and serious about working with them.
Suppliers may not be able to accept your MOQ because they have to purchase special parts to customize them.
In this case, you can ask them if you are willing to pay the cost of the parts for this order and if they are willing to accept your MOQ. After all, your first order also has to make sure the parts fit.
If the supplier cannot accept your MOQ because they cannot recover their costs, you can increase the product quotation or increase the MOQ value, such as from 30% to 50% of the MOQ. Attach a purchase order and send it to the supplier so that they know they can discuss everything.
If they still refuse and don’t offer any other terms, then you can be sure that they really can’t lower the MOQ.
How do different types of suppliers have different MOQ settings?
|Manufacturers||Relatively high||Cheap||Reluctant to accept small orders or higher prices for small orders|
|Traders||Flexible||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
No after-sale protection
|Agent||Flexible||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|
Some MOQ recommendations for common supplies
MOQ will be affected by many factors, as we mentioned earlier. So we have no way to show you the MOQ of each product in detail. The following are 10 products we purchase most frequently, and we have summarized their MOQ. If you want to know about the MOQ of your product in China, you can leave a message below and we will have a dedicated customer service staff to serve you.
If you have limited funds, it may not be easy to find a supplier with a reasonable price and a low MOQ. But this is not impossible. What you need is more time to find and talk to suppliers. According to the methods in this article, I believe you can find the most suitable supplier for you!