Your guide to MOQs and establishing a beneficial relationship with your suppliers and manufacturers.
→ Reasons why you may or may not be able to hit an MOQ [examples + solutions]
Navigating the world of MOQs can be overwhelming, especially for start-up businesses.
You gain greater control over the supplier costs associated with your products by making informed decisions about MOQs and how they can and cannot work for your company.
A good relationship with suppliers and manufacturers is the core of your business. Establishing this significant relationship will help you navigate MOQs fairly and honestly by working to develop mutually beneficial solutions that serve your business and supplier.
Epic Sourcing AU has already done a great job defining the basics of MOQ here. Even with cost or inventory limitations, this article will show you how to build a real relationship with a manufacturer in China.
MOQs allows suppliers to maximize profits while getting rid of inventory quickly, ensuring that manufacturing costs don't outweigh product orders and impact profit margins.
MOQs are often high for top quality products because the more resources it takes to produce a part, the higher the MOQ. For a manufacturer to find a product worth their resources, an order must be of higher volume.
MOQs alter depending on the product and your expectations. For example, a manufacturer would be unwilling to send 1000 pens in a 10 pens per month plan as the cost of shipping and processing outweighs the profit margins. But never be afraid to ask! By showing you are willing to begin a valuable long-term relationship, hey may be more flexible.
By forming a transparent relationship with a manufacturer in China, where you prove you’re willing to adapt and understand their requirements, you begin to navigate the ins and outs of MOQs without compromising the quality of production or costs for your business.
If you are not in the position to order a complete MOQ order, request a sample first! This shows the manufacturer that you are a serious buyer and appreciate their time and services. If you don’t know how many items you want, ordering a sample allows you to test the quality and assess whether the sample matches your requirements.
If you have never ordered samples before, you can engage with the services of a sourcing agent to order samples for you. As a result, you'll learn how to work with a manufacturer to create your ideal product in collaboration with them.
A top sourcing agency will have a team on the ground in the country you’re sourcing from that assess’ product quality, provides detailed photos and conducts factory visits.
Working with a sourcing agency will exemplify a way to establish a great relationship with a manufacturer. Support with ordering samples is a common request from our clients where we deploy The Product Wizard, the fastest way to get to the Golden Sample.
You can get the most out of a relationship with a manufacturer in China, even if you can’t afford their MOQs or inventory space. Remember, there’s a solution to everything!
Solution: Ask for a sample or negotiate for a long-term payment system (read more under samples). Alternatively, check if the supplier can use a lower quality material as a substitute for the original material used to drive the production price down.
PRO: You get a price reduction and save money on inventory and MOQs.
CON: Some suppliers may not offer this as certain products can’t be made in low-quality materials. Driving down supplier MOQs too low may also force suppliers to compromise on the quality of the product they produce for you.
Solution: You can pay the MOQ price but ask for a specific number of items you need. Check if the supplier can produce the entire production run and give half of your order first and receive rest at a later date.
PRO: You’ll get the preferred number of units, saving you from managing unnecessary inventory you cannot sell, or pay upfront.
CON: Suppliers will still charge you the total MOQ upfront, but you can give the supplier the option of selling, offloading or discarding the leftover inventory. Not all manufacturers are open to this idea as some may not have the storage space for it. Others may be willing to help you if they know you’re serious and will become a loyal customer of theirs.
Driving down supplier MOQs too low may force suppliers to compromise the quality of the products they produce. Lower-quality materials can be used to cover the cost of production and make a profit, but this can make your products seem low-quality or less durable.
While low MOQs seem like an excellent solution for you, it’s important to consider the potential risks. Some suppliers may want your business so much that they are willing to drive down their MOQs just to keep you as a customer. But this may come at a cost to both you and your supplier.
MOQs that are too low can cut into the supplier's profit, and it may make them reluctant to do business with you again, reducing your chances of gaining their loyalty. Suppliers also need a profit and MOQs cover operation and production costs.
Tip: As an entrepreneur, a reputable brand is crucial, and low-quality products may hinder your brand identity. You might not have brand recognition early on, so exploring a strategy of selling high-quality products at a mid-range price is worthwhile.
Relationships in business are paramount, and establishing a good relationship with a supplier over MOQ’ is crucial. Altering MOQs comes with a compromise for the supplier, so considering these tips with suppliers requires strategy and clear communication as you are the supplier's customer.
Adhering to a manufacturer's MOQs offers an opportunity to establish sustainable and long-term relationships with manufacturers. Any potential plans to expand your inventory are guaranteed through a well-communicated agreement that serves both parties. Forming this open line of communication through the initial negotiation process ensures your supply chain is consistent and available.
