Guest post by Amanda O’Brien, Amazon and eBay Expert
Minimum Order Quantities, otherwise known as MOQs, have the power to strike fear into any newbie seller or product sourcer! It can be pretty terrifying and frustrating to see huge MOQs, particularly when the figures quoted are in the thousands, sometimes as high as 5,000 or 10,000. This though is commonplace, especially on sites such as Alibaba or Global Sources.
These manufacturer marketplaces are business to business which means that higher minimum order quantities will of course apply, simply because the manufacturers expect to be dealing with businesses with huge buying capacity.
They want to supply products in huge bulk as this is how they make their money and what makes it cost effective for them doing a run of a product in the first place.
The question is, what if your budget is limited but you still want to deal with manufacturers to enable you to source competitively priced products. And what if you simply want to test the market first?
Through years of experience, I know that one of the biggest problems that many sellers face when researching products and suppliers on sites such as Alibaba is the MOQ stated.
So, what if you simply can’t stretch to those quoted MOQs?
Well first, please don’t take those MOQs at face value! They are there as a guideline only. Of course, manufacturers want you to order 5000 of a product, but all is not as it seems. You can negotiate.
You might be surprised to learn that in most cases you can easily negotiate MOQs by at least 30%, sometimes more if you know how to do it properly. Of course, there will always be suppliers who won’t negotiate but from my experience, I can safely say that most suppliers will. Remember, they want your business – so don’t be tempted to adopt the usual reaction when you see high MOQs and run away screaming!
In the past I’ve negotiated MOQs down from 500 to 100 and from 1,000 to 250… it’s all about the negotiation.
When talking about negotiating the MOQ, you have to be a little bit realistic with the numbers though. It’s perfectly reasonable to negotiate the MOQ from 1000 to 250, if that’s all your budget allows, but 5000 to 250 or 1,000 to 25 is just not going to happen. You can of course try, but bear in mind that the chance of you being successful is low.
So, here are three tactics you can use to reduce those MOQs (assuming you have seen and tested your samples already).
Tactic 1 – Be a ‘first time buyer’
Tell your supplier that as this is the first time you’re buying from them, you want to test how everything goes with a smaller quantity. So instead of, for example 1,000 (manufacturer’s MOQ), you would like to test the water with for example, 250 units for your first order. Simply wait and see what the supplier says – it’s not unusual for them to accept your offer straight away as this is an actual order you are wanting to place – and suppliers want orders. Sometimes they will increase the price of the product slightly for lower MOQs, and that’s fine just as long as it makes financial sense for you to order at that price.
Tactic 2 – Mix and match your order
This is when you order a variety of different products from one supplier, without having to meet the MOQ for each one individually. You’ll still have to adhere to an MOQ but this way you don’t have to take a huge volume of one particular product and can instead spread your risk and capital on a more varied product line. Of course, this method won’t work for all products or niches but for some it’s ideal.
Tactic 3 – Ask for products that don’t require manufacturing
Most factories in China only manufacture products as and when they are required, simply because it’s inefficient to keep high volumes of pre-made stock. This is actually usually the main reason for MOQs in the first place, as they need to produce a certain number in one go for it to be cost-effective.
But every now and then, due to a cancelled order or simply excess stock, there will be some products that are already made and ready to ship. Most of the time a supplier will be more than happy to sell these to you in pretty much any quantity, as it’s something they want to get rid of anyway. So, ask if they have any overstocks or cancelled orders that you can take off their hands.
If you follow these strategies, in most cases you’ll be able to negotiate minimum order quantities by at least 30%, however, you should also remember that you’re never likely to get the absolute lowest prices when buying below the MOQ and so sometimes it’s not worth ordering a really small quantity of a product as when everything is added up you can be paying quite a premium so is not a solution for every product.