Dealing with High MOQs

When you receive your first quote from suppliers, three letters are going to be nearly as important as the prices you receive: MOQ. MOQ, or minimum order quantity, is the minimum order suppliers will accept. For example, supplier XYZ may specify a MOQ of 100 for horse saddles. Often this MOQ will be either slightly higher, or a lot higher, than the quantity you really want to buy. Almost all suppliers have a relatively high MOQ simply for the fact there are economies of scale when a buyer purchases larger quantities.

MOQ can be a bit of a moving target as it is a term used ambiguously by suppliers and a lot of questions are raised when you first see it. First, is the MOQ negotiable? (often it is) Is the MOQ per individual SKU or is it per order? (for example, would 50 horse saddles and 50 horse shoes meet the MOQ requirement?) Is a lower MOQ accepted for trial orders?

My experience with MOQ is that it is often very flexible. For many of the products my company imports, which have costs ranging from $10-$100, suppliers tend to specify MOQs around 50-200 units each. Generally, I simply ignore this. In the vast majority of cases, if a supplier specifies a MOQ of 100 units and I send them an order with 50 units asking them for their banking information to send the 30% deposit, I never hear them complain. If you can meet 50% of their MOQ requirement (and possibly as low as 25%) chances are you will experience the same.

Now what happens when the supplier is a haggler on the MOQ or they have a MOQ so high you can’t even come close to meeting it? If you’re close to the MOQ for a particular product, often a supplier will be more flexible if you increase the overall order size by adding other items. For example, as mentioned before, importing saddles and horse shoes. Assuming price isn’t a huge obstacle for you, you can also let your supplier know you have some flexibility on the price if they’re flexible on the MOQ. Finally you can simply consider ordering more product and meeting their MOQ.

If you’re very far off the MOQ demands of your supplier, for example, they have a MOQ of 5000 units and you want only 100, things are slightly more tricky.  In these cases, your best option is to explore if you can have your order grouped with another customer’s order. If time is not of utmost importance, you can often simply have your order added to the production run of another company. I my experience, if you have an existing relationship with a supplier they’re normally happy to do this. If it’s your first time working with a supplier they may be more hesitant to accept this.

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