7 Tactics to Help You Negotiate Lower MOQ

Contents:

• What is MOQ?
• 7 Tactics to Help You Negotiate Lower MOQ with Suppliers
• What to Do If You Fail to Negotiate a Lower MOQ?
• How to Meet the MOQ？
• What is the Importance and Impact of MOQ?
• What Products Require Higher MOQs and Why?
• How to Calculate MOQ?

What is MOQ?

MOQ Means Minimum Order Quantity

The MOQ (Minimum Order Quantity) definition refers to the minimum amount of products that a manufacturer is willing to produce or a wholesale supplier is willing to sell. In actual business, if you desire mixed batches, many suppliers will convert MOQ into a certain monetary amount.

MOQ Meaning in Supply Chain

Unlike retailers and dropshippers, wholesale suppliers or manufacturers make money by selling products in bulk, as the profit per unit is very low.

Minimum Order Quantity (MOQ) is an important aspect of the wholesale supply chain, including manufacturers and sourcing agents. The most important reason for setting MOQ in the supply chain is to cover the cost of production. If quantities are too small, it is difficult for manufacturers to operate the machines for production and determine the quantities of raw materials or packaging materials required.

MOQ Meaning in Business?

If you are a businessperson, you might be interested in understanding the meaning of MOQ in business. In this section, we will provide examples of online wholesale and supplier platforms in China, such as Alibaba, DHGate, or Global Sources, to illustrate what MOQ entails in business.

Traditionally, when sourcing suppliers offline, you would need to meet with them in person to discuss the minimum order quantity (MOQ) and other relevant details about the product.

However, with the growing popularity of e-commerce, many buyers prefer to place orders online. E-commerce websites can help streamline the ordering process, but MOQ is still a common requirement in most cases. The good news is that these websites often display prices for different order quantities.

For instance, if you are a new businessperson looking to import water bottles in bulk from China, you should research prices and the market situation beforehand. Then, you can browse various suppliers on websites that offer this service.

MOQ on Alibaba, DHgate and Global Sources

If you’re an entrepreneur who is new to importing and looking to purchase water bottles in bulk from China, it’s important to research prices and market conditions before making the trip. Once you’ve done your research, you can explore potential Chinese suppliers on various websites.

• MOQ on Alibaba

On Alibaba, MOQ (Minimum Order Quantity) means the same as on any other wholesale website. In the picture provided, you can find different pieces with corresponding prices for you to choose from.

If you need to order less than 500 pieces, the price will be $2.72. If you need to order more than 499 but less than 3000, the price will be $2.55. If you need to order more than 3000 pieces, the price will be $2.21.

Please note that this is just a sample for your reference, and if you look through other products on Alibaba, you may find that the required MOQ is different. However, this does not mean you are limited to these quantities. Within the order quantity range, you can negotiate with the suppliers based on your real order to meet the suitable MOQ.

For instance, if you want to purchase 2000 pieces of bottles in the picture, you can negotiate with the supplier for a better price lower than $2.55. If the negotiation result is ideal, your final price may be just $2.40.

It is important to note that the MOQs listed on the product page are not final, and you can always negotiate with suppliers to get better minimum order quantity and unit price.

• MOQ on DHgate

When shopping for bottles on DHgate, it’s worth noting that prices for different quantities are typically lower than the MOQ of Alibaba. However, it’s important to keep in mind that these prices are still higher than what you would find on Alibaba, since the suppliers on DHgate follow the business model of small profits but quick turnover.

If you’re a small business owner or startup, it may be beneficial to consider DHgate as a supplier rather than Alibaba, especially if your MOQ is small. Before making any purchases on DHgate, it’s important to do your research and ensure that it’s a safe and legitimate platform. You can find more information on DHgate’s safety on this page.

• MOQ on Global Sources

If you search for bottled products on Global Sources, you may notice that their wholesale MOQ is quite large, but their prices are relatively low. Generally speaking, Global Sources may be a good option for large businesses or those with strong sales abilities looking to wholesale their products.

If you’re interested in buying, there is an “Inquire Now” button available to you. This allows you to negotiate with suppliers or manufacturers for lower MOQ manufacturing and more favorable prices.

7 Tactics to Help You Negotiate Lower MOQ with Suppliers

Negotiating with suppliers is essential for achieving your business goals. This section will provide several tips and introduce seven tactics to help you negotiate lower minimum order quantities (MOQs) with your suppliers

1. Being Honest with Suppliers

As a new business owner, you may be tempted to pretend to be more experienced than you actually are when negotiating with suppliers. For example, you may negotiate for a quantity of 10,000 pieces when you only need 1,000 pieces.

On the other hand, if you are an experienced business owner but your order quantity is small, some articles may suggest that you pretend to be a beginner in order to get the supplier to lower their minimum order quantity (MOQ) for you.

However, these approaches are not effective and can actually harm your business negotiations. For one thing, suppliers are usually experienced enough to recognize whether you are a novice or an expert.

Additionally, many Chinese suppliers are willing to lower their MOQ for first-time customers, as long as it is within their cost range. By being honest about your situation and the quantity you need, you can open up more negotiation options than by using false pretenses.

If you cannot meet the supplier’s MOQ but still want to purchase their products, consider negotiating a slightly higher unit price. This may be a more feasible way to make the cooperation work, as it is unlikely that you will be able to get the lowest price and the smallest MOQ at the same time.

2. Consider Suppliers’ Perspectives

Business is built on win-win cooperation, so it’s important to consider problems from the suppliers’ standpoint. Don’t let suppliers compromise unilaterally.

As mentioned earlier, suppliers need to ensure their profits and cover their production costs, which are more complex than you may think. These costs include machine running, labor, materials, and other necessary expenses.

By putting yourself in the suppliers’ position and understanding their difficulties, negotiations will become easier. It’s important to express gratitude for their cooperation and convince them that they won’t suffer any losses from working with you. This way, long-term business cooperation can be built.

3. Apply Pressure to Suppliers

In addition to being sincere and grateful for cooperation, it is important to also apply a certain amount of pressure on suppliers. This is a commonly used tactic in business negotiation.

Relying solely on one supplier puts you in a passive position. Firstly, you are unable to compare the quantity, quality, and price of products that other suppliers can provide. Secondly, if the supplier insists on a minimum order quantity (MOQ), you are left with no room to negotiate better terms or a lower MOQ.

You can inform suppliers that you are interested in cooperating with them, but also considering other suppliers. If they cannot provide the best terms for MOQ, you will explore other options for cooperation. This increases competition and pressure on the supplier.

If the supplier believes they can still profit from your order, they would not miss the opportunity to cooperate, as refusing to cooperate would give other competitors a chance. A smart businessman would never let this happen.

4. Take Your Time to Compare Before Placing an Order

This tip is similar to the previous one. You should allow ample time for consideration, both for yourself and for potential suppliers. Take the time to compare different suppliers to find the most suitable partner.

For example, the first supplier may have a minimum order quantity (MOQ) of 500, which you believe is acceptable. However, if you rush to place an order, you may miss out on the second or third suppliers with a lower MOQ. Remember, comparison purchasing and careful consideration are key to success in business.

Furthermore, if you rush to place an order, the supplier may believe that you have no other options, and they may not offer any concessions or preferential terms.

Instead, you can ask the supplier to consider lowering the MOQ and inform you of the result within 2-3 days. During this period, you don’t need to urge them, just wait patiently for their reply.

By adopting this approach, you demonstrate that you are not desperate to work with the supplier, and they will perceive that you have other options available. This is a psychological tactic that can work in your favor.

5. Choosing Stock Products over Customized Ones

When it comes to lowering the MOQ, opting for existing stock products is a better choice. Wholesale suppliers usually have a large inventory of products, so whether you order 500 or 1000 pieces, it’s not a big difference to them.

On the other hand, customizing products from suppliers can be difficult to lower the MOQ. To meet your requirements, suppliers may need to create a new mold or purchase specific parts, which can be costly. From design to production, customized products require more effort and investment, resulting in a higher MOQ.

If you are willing to bear the costs of mold making or partial parts, suppliers may be more inclined to lower the MOQ.

6. Lowering Your Product Demands

If you cannot negotiate a lower MOQ with your suppliers, you can consider lowering your demands for the product itself, such as patterns, styles, or materials used. While this may not significantly change the MOQ, it can lower the total price of the order to some extent.

7. Change Your Payment Method

The most common payment method is to pay 30% upfront when placing an order and the remaining 70% balance after receiving the goods. To lower the MOQ, you can choose to increase your upfront payment or even pay the full amount immediately.

By doing so, suppliers may view you as a sincere and trustworthy partner and be willing to lower the MOQ to some extent in order to establish a cooperative relationship.

What to Do If You Fail to Negotiate a Lower MOQ?

If you are unable to negotiate a lower MOQ with your supplier, one option is to contact other suppliers. This is why it is important to have multiple options and make a full comparison beforehand. If you still wish to cooperate with the current supplier, the next section will provide tips on how to meet the MOQ.

It is also important to ensure that the negotiation ends on a positive note, even if a deal cannot be reached. This is because you may need to negotiate with the same supplier again in the future or the next supplier you contact may have a relationship with the current supplier.

How to Meet the MOQ？

If you are a new buyer or a small startup, meeting the MOQ requirement can be challenging. However, it does not mean the end of your business. There are various methods to help you solve this problem, which will be discussed in the next section.

Group Purchasing

If your order quantity cannot meet the MOQ of suppliers, you can opt for group purchasing. This means you can jointly purchase the same types of products with other buyers and receive the goods separately in batches.

This method may increase the pressure of competition among buyers in the later process. However, it gives you a chance to sell your products based on meeting MOQ.

Moreover, you can also communicate with other competitors regarding product marketing methods because knowing yourself as well as your competitors is key in competition.

If you do not want to compete with other buyers but still want to meet the MOQ and purchase the products, you can choose the next method.

Advance Sales

If you do not have enough money but still want to meet the MOQ and have the ability to reduce inventory without much pressure, you can choose advance sales.

Advance sale helps you collect partial payment from your customers for goods, and you can use this payment to meet the MOQ and place an order. This way, you have many possibilities to meet the MOQ and reduce your financial pressure.

Note that if you choose this method, you should be responsible for your customers and cooperative partners. It requires high credibility, careful preparation, and a serious attitude.

Partial Payments and Orders

When buyers are limited by their own circumstances, such as not having enough storage space to hold the quantity of a single order or not being able to pay the full amount at once, it may be possible to negotiate with suppliers to deliver goods and pay in batches.

However, not all suppliers may be willing to cooperate in this way, as it can increase their workload and require additional storage space for the products.

Some suppliers currently choose to cooperate with new buyers in this manner, but it is important for buyers to have a high degree of credibility in order to successfully establish a cooperative relationship.

Working with a professional sourcing agent can help you obtain a lower MOQ.

What is the Importance and Impact of MOQ?

When it comes to Minimum Order Quantity (MOQ), there are no absolute advantages or disadvantages. The impact of MOQ varies depending on the supplier, manufacturer, and buyer.

MOQ for Factories and Suppliers

Suppliers prefer buyers to purchase as much as possible. By setting an MOQ, suppliers can make a profit while also limiting their cooperation or service to a certain range of customers. In some special periods, suppliers may change their sales methods and temporarily increase their MOQ to target specific customers. For example, during the Coronavirus pandemic, Dasheng, one of the few manufacturers with NOISH N95 mask production qualifications, increased its MOQ to $1,000,000 to filter out fake orders and focus on true orders.

MOQ for E-commerce Businesses

MOQ helps e-commerce businesses find suitable suppliers based on their quantity demands. Small-scale businesses that require low quantities can find suppliers who can provide low MOQs to avoid higher costs. Amazon sellers are advised to choose products with fewer SKUs to reduce inventory stress and avoid the need to prepare many SKUs in stock.

For example, sellers can choose products like pulley blocks that have only a few models and no choices of colors or sizes.

If without MOQ, large-scale businesses still have their worries. They need suppliers who are capable of large-scale production. If they choose multiple channels to purchase goods to meet their large demand, the goods may be made from different materials with varying qualities. This also means potential risks.

Minimum Order Quantities (MOQ) for Buyers or Merchants

MOQ can be challenging for small businesses or new startups, as complying with suppliers’ MOQ can lead to significant inventory pressures over a certain period, which increases the investment risk.

Moreover, buyers are limited in choosing product styles. For instance, if a buyer intends to purchase 3200 pieces of products in ten styles, but the supplier sets the MOQ per pattern as 800 pieces, the buyer can only buy four styles or fewer patterns to meet the order.

However, the unit price per product usually receives a discount for MOQ orders. Some suppliers wholesale with MOQ and also retail in smaller amounts according to customers’ demands.

In this case, the wholesalers’ unit price is lower than the retail price. Buying more products wholesale can reduce the unit price, which means more profit for a single product.

Nevertheless, the weakness of MOQ for new buyers or merchants is hard to overcome. It is crucial to gather as much necessary information on the market as possible and compare suppliers laterally to find the ones suitable for your business. Alternatively, you can change your stock ways to balance costs and lower risks.

What Products Require Higher MOQs and Why?

Generally, customized products require higher MOQs due to the various customizations involved, such as adding a logo, changing colors, parts, materials, design, and more. Preparing materials and creating new molds require additional money and labor.

Different customized products have different MOQ standards. Products produced in mass, such as glass articles, plastic articles, and vacuum cups, require higher MOQs due to the need for new molds, which can be costly for manufacturers. The machines used for producing these products are expensive, and the costs for running and operating these machines are also high. Even creating a small lid mold can cost around $430-$1,000.

On the other hand, if you want to customize a backpack, it is less expensive and requires lower minimum order quantities (MOQs). It can be easily changed without the use of large machines. This type of product is mostly handmade, including:

• Backpacks
• Shoes
• Apparel
• Handbags

How to Calculate MOQ?

In some courses, you may come across various formulas for calculating MOQ. However, it cannot be calculated precisely. Instead, you can consider different factors to determine your MOQ.

There are different methods you can use to estimate your sales status. Based on this, you should also consider several factors before deciding on the profit and MOQ of your products, including:

• Shipment costs
• Labor costs
• Package costs
• Taxes
• Other fees

The End

When it comes to Minimum Order Quantity (MOQ), it may not be easy to find a vendor that meets both your pricing and quantity requirements. Keep in mind that the lowest MOQ may not necessarily be the best option, as the key is to find a supplier whose price and MOQ are within your budget range.

We are onestopimport, a leading sourcing agent based in China. We have helped many entrepreneurs, including small startups, Amazon sellers, and retailers on Google.

If you have any questions about MOQ, or if you are interested in importing products from China, we are more than willing to help. Please do not hesitate to contact us.