MOQ, the full name is Minimum Order Quantity, which refers to the international trade term for minimum order quantity (MOQ), which refers to the minimum quantity of production or shipment that such suppliers are willing to undertake when placing a single order with a supplier.
MOQ is usually established by the manufacturer or distributor of a product in order to ensure that each time they make production or sale, they can ensure their production situation and cost control. Examples include minimum order quantities, packaging quantities, methods, etc.
The purchaser’s proposed order quantity is developed on this basis. The ultimate goal of all negotiation activities regarding MOQ is just one, to try to find a minimum quantity that we can afford and that is also acceptable to the supplier.
What is The Meaning of The Foreign Trade Term "MOQ"?
The term minimum order quantity, I think it is not only trading companies, even Chinese suppliers often encounter minimum order quantity requirements. Many foreign trade companies have their own design section. After the designs are completed, they are placed in the factory for production, and then the factory will make a quote and confirm the quote accordingly. The starting order quantity is usually different for different products. Let’s take a closer look at what the foreign trade minimums mean today.
Why Set MOQ？
The low minimum order quantity is generally dependent on the production costs required by most Chinese manufacturers, which include not only the labor and raw materials, but also the cost of opening the machine, and even other special costs and shipping costs that are not only complex and time-consuming but also overall production costs.
Usually, factories set minimum order quantities to reduce costs, and limit minimum amount because each type of product requires a different mold. If the order quantity is too small, it is not cost-effective. For example, I have a small product that a unit price of $4.00, but my tooling cost is 200. If the customer places down 50 pieces, then I will have to pay the material cost and labor cost without paying ten cents. Therefore, in this case, the factory will usually set a relatively high minimum order quantity, for example, greater than or equal to 1000.
What If a Customer's Order Does Not Meet The Minimum Order Quantity?
Usually, if the minimum order quantity is not reached, the factory will resort to a price increase, for example, by directly increasing the tooling cost and spreading it over each product. In any case, this method will not be lost.
Of course, there are several more common methods. Sometimes a customer may not accept a price increase, but we don’t want to give up on that customer. Several customers can make up the order. After all, factories are limited to new products each quarter and often have several customers. Choose the same product, or extend the lead time, and try waiting for other customers to choose the same product and schedule it together.
Origin of The Minimum Order Quantity
The concept of minimum order quantity has existed in industrial supply chain. Factories often impose a minimum quantity of units required before production can begin, primarily because overhead and machine costs require them to maximize production time to recover costs. This leads Chinese suppliers tend to add a “minimum order quantity”, either through negotiation or printed advertising, because of narrow profit margins. Suppliers MOQ important.
Tips for Negotiating Your Minimum Order Amount
Some suppliers set their lowest quantity size higher than the actual minimum order size because they want to discourage small orders to maintain a higher profit margin. As a seller, you can certainly understand this and it will help you get the right mindset to start negotiating.
1. Place a sample order quantity
Before formally placing an order, be sure to ask the supplier for samples. After confirming the quality of the products produced by each supplier, then calculate the size of the starting order. Note that each supplier’s product offer and starting order size may be different.
Note that when you purchase a sample order from a supplier, tell them that you are interested in continuing to work with them. Tell him that you are asking for samples to inspect the goods first and that the final order size will depend on the quality control of the samples.
2. Sellers who say they are first-time buyers
As a seller, I believe you can put yourself in the shoes of a supplier doing business. So don’t tell the supplier that you’re not sure if the product will sell, or that you don’t have enough money to buy more quantities. This way the supplier will not care about you and will be less willing to work with you.
Say that this is the first time you are buying from them or you are a small business and that you want to start with a small order for a test run of an ideal quantity of about 20-25% MOQ. Generally speaking, suppliers will accept this request right away, and they will assume that you really want to buy and not just ask for a price.
Be prepared, though, that you may end up quoting a higher price per item than the low MOQ price. If you think it doesn’t matter, you can place a purchase order volume.
If your product is to be customized, then the supplier generally will not accept small orders because they may have to purchase special parts separately if they want to produce a customized product. But you can still try to negotiate with the supplier to reduce the starting moq requirement by 30% or even more.
Let the supplier know that you value the successful completion of the first order. Present your requirements for the production of the product first, and then negotiate with the person to reduce the starting order quantity. Tell him that you want to gather feedback from the market to improve the product before you are ready to place a large order.
Note that when negotiating, it is best to keep the reduction range to 30% or less. If you quote a starting quantity that is too low for the supplier to collect, you are less likely to negotiate successfully. If the supplier is not willing to compromise, then try the next strategy.
3. Worry about people's worries, and people worry about their worries
If the previous negotiation fails, then go on to show that you understand his position. Tell the supplier that you will never let him lose money and that you have a long-term partnership in mind.
Put yourself in the supplier’s shoes and if they understand, they may accept the MOQ you propose.
4. Communicate with suppliers and reason with them
Continue to communicate with suppliers to establish a rapport.
You don’t have to be professional, as long as your overall tone is sincere. When talking, you can take the initiative to explain your ability to sell products and reassure them that you are a buyer who really has the intention to buy. Suppose their starting order seems to be more difficult than others.
Reiterate that you will be spending money on promoting this new product. Provide details, such as the percentage of freebies and how much you will spend on advertising. Be straightforward.
When negotiating, you want to clearly let them know that while you think this supplier is the best fit, you currently have other more suppliers to consider, and if they can’t meet your proposed MOQ bid, you’ll have to find another supplier.
The best time to give the other party response is 48 hours, which gives them time to ask their boss before giving you a specific answer if they are just an employee.
You can also buy the stock they have produced in their hands. Generally, factories only bulk production when there is demand for orders or inventory forecasting shortage, but occasionally orders are temporarily canceled or there is excess output, in which case you can usually purchase the product at the china own MOQ stands you propose because the manufacturer wants to sell the batch as soon as possible.
Note that when negotiating with china suppliers, leave things open and never end negotiations unpleasantly with each other, because you may still come back to them. You don’t have to feel pressured when you see a high starting order, politely tell the supplier that you need to release the product for testing before you can officially place large quantities.
What is The Usual Order Quantity of Imported Faucets?
The production process of faucet is rather complicated: copper ingot → dissolution → casting (low-grade with sand casting, high-quality faucet with gravity casting) → cleaning after casting → casting inspection → machining → tolerance inspection → leak test → grinding → surface inspection → plating → plating inspection → assembly → water test leak test → finished product inspection → packaging → factory.
Each step determines the minimum order quantity standard for each faucet, after our company’s precise costing, the minimum number for 300 faucets is the lowest, the price is a win-win for both buyer and seller!