What You Need to Know about MOQ
In previous article, we introduced several methods for finding suitable dropshipping suppliers. When they providing quotation, price always come with MOQ. For some dropshipper and buyers who unfamiliar with MOQ, this article will show you the meaning of MOQ from both the buyer’s and supplier’s angles, analyze what kind of products that require MOQ, and examine the advantages and disadvantages of MOQ. This article might help you determine whether MOQ is necessary during your following business route.
MOQ meaning
MOQ stands for “Minimum Order Quantity”. You can think of it as the minimum quantity you are willing to order, or the minimum quantity the supplier is willing to provide.
What’s MOQ meaning by supplier?
As supplier, MOQ means the necessary quantity for producing a single product. It is set to ensure the optimal balance between production cost and profit. If supplier consistently produces products for setting as stock, it means they already has the condition for large-scale production, MOQ no longer needed by them.
However, for no-stock or customized product, it requires material, machinery and process for every single production, then supplier will require MOQ to cover the costs of production. This quantity ranges from 500pcs to 1000pcs, depends on what kind of product you try to buy.
MOQ meaning for dropshipper/buyer
For dropshipper and buyer, MOQ becomes a concept more like a inquiry condition. If MOQ you propose is attractive enough, suppliers may offer discounted price based on it. Your MOQ will also affect many terms such as payment methods, delivery time, available custom solution and packaging option. If you have enough budget and able be flexible with your MOQ, don’t hesitate to let them know, very helpful to negotiations.
What product requires MOQ?
For newbee buyer and most of dropshippers, a limited budget can restrict your MOQ. Of course everyone hopes to get most unique product with the lowest MOQ possible, but let’s face to truth. But we will help organize and introduce what kind of product/project will definitely require MOQ and which product can minimize or even better, kill the MOQ.
Off the shelf, No-MOQ
Stock products no need MOQ, it’s flexible to buy products no matter 2 or 10pcs and you can easily create large product categories. However, when a product becomes off the shelf, it means it’s produced by many public toolings and already selling very mature in market, customers will easily compare prices between hundreds of stores, it’s very easy to loose competition.
Light customizatio, MOQ＜100pcs
Example project- custom metal/wood stock products
The concept of light customization includes adding simple logo or easy-custom packaging options to supplier’s stock products. For example, laser-engraved logos on metal or wooden product only requires MOQ for 100-200pcs normally. Many factories have their own laser engraving machines to meet buyers’ small-MOQ needs. As for packaging, printing simple logo on stock bag MOQ 100-200 will be quite enough, which is friendly for new established branding customers.
Regular customization, MOQ ＞ 500pcs
As mentioned earlier, supplier requires MOQ due to limitations in raw material and production process. For example, a factory specializing in producing pillows may have dozens styles of products. From a cost perspective it’s impossible to stock all these products. Therefore, they only purchase raw materials and produce if there is customer placing order for specific styles. In this case, the MOQ start from at least 500pcs.
Senior customization, MOQ＞5000pcs
When some customers already experienced for their products field, they may interested diving into new development or innovative projects. That will lead MOQ into great new step forward. These products may already spent huge time and money during early-stage research, plus molding and intellectual property investment, supplier may requires bulk order of at least several thousands to balance the costs from early investment and production.
Important notice: different factories will offer different MOQ conditions for same product. It’s necessary to compare quotes from multiple suppliers to find the most suitable MOQ and price.
Advantages and Disadvantages of MOQ
Reasonable MOQ leads to rational allocation of production cost. For supplier, 500 or 5000pcs production cost will be entirely different. Try to evaluate your affordable budget and market expectation, choose higher MOQ as much as possible can control your cost and profit maximally.
We do not recommend you choosing supplier with MOQ higher than light customization if you don’t have clear market expectations and enough experience. Instead, it will eat your budget and will be difficult to move on because there will be more cost you need to consider before selling, like shipping, advertising and after-sale cost.
Warm tips before ending:
- Try to locate couples nice suppliers and built connect when you met them even you can’t reach their MOQ, you will need them after your business
- MOQ can be negotiated, most of suppliers are willing to reduce their MOQ just for getting your first cooperation.
- Consider using CreativeDrop as your business partner. We are very friendly to small and medium-sized dropshippersfor light-regular customization, also support for senior development projects, try to Learn more about our service and case through here.
