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eCommerce Tips & Trends

Your Guide to Minimum Order Quantity (MOQ)

MOQ means minimum order quantity. To buy wholesale, you often need to meet this number or pay more per unit.
Your Guide to Minimum Order Quantity (MOQ)
Ian Heinig

By Ian Heinig

 

May 21, 2021

If you’re new to sourcing eCommerce products, minimum order quantities (MOQs) are dauntingly large numbers. To maximize profit margins, though, you’ll need to get comfy with minimum order quantities.

What is MOQ? Here’s the meaning of MOQ: the fewest number of units of inventory you can purchase at one time.

In eCommerce, wholesalers set their minimum order quantities as high as 100, 500, or even 10,000 units. When you buy in bulk, you spend less per unit. Alternatively, you might be required to spend a minimum amount on inventory, like $100 or $1000.

In this blog, we’ll walk you through MOQ meanings and how they impact your buying and selling in eCommerce. Easyship is here to help you save on eCommerce shipping. For example, need help finding warehouse partners to store your wholesale inventory?

We’re happy to connect you to our global network of warehousing partners at no charge.

MOQ Means Minimum Order Quantity

What does MOQ mean? MOQ stands for minimum order quantity. A minimum order quantity is the fewest number of units you can purchase at once.

A real-world example of an MOQ is a dozen eggs. You can’t rock up to Whole Foods and buy a single egg, right? Egg producers have lots of eggs to sell. They set their minimums at 12 to ensure they move a set number of units.

In eCommerce, the manufacturer or supplier sets the MOQ. These businesses sell to other businesses who buy in bulk, meaning they make money by selling a lot of units.

If an MOQ is in place, your order amount will need to meet or exceed that base number.

For example, an apparel wholesaler like American Apparel might require you to purchase at least 100 units of a certain style of T-shirt. Alternatively, you might be required to spend a minimum dollar amount on that specific style of shirt. If you don’t, you won’t be allowed to complete the purchase.

Supplier MOQs can be a hurdle as you source products for your eCommerce business.

After all, what if you don’t have enough cash on hand to meet the minimum? In many cases, this means you can’t buy from suppliers with the most competitive prices. Or you’ll just pay more per unit. Being poor is expensive, so to speak.

Fortunately, MOQs are more like guidelines than hard and fast rules.

If negotiated properly, you can expect to shave about 20-25% off the MOQ number. We’ll show you how to negotiate down an MOQ in the section after next.

Wholesalers Use MOQs To Move Product

Why even have MOQs at all? Why would a business owner refuse money from someone with cash in hand? Wholesale suppliers use MOQs to do two important things at once:

  • Weed out small-time shoppers
  • Sell large volumes of product at once

If you’re a wholesaler, you buy stock from manufacturers in large quantities. And manufacturers only manufacture products when there’s an actual demand. Wholesalers order a production run from manufacturers – say 20,000 units – then set a high MOQ to recoup their investment.

If you're a wholesaler, you’re uninterested in selling a few units here or there. To reap a profit in a timely manner, you need to sell a lot of units at once. Wholesalers use MOQs because otherwise they risk losing money on unsold goods.

Wholesalers are looking for a few things in their business model:

  • Turning over inventory
  • Eliminating slow moving SKUs
  • Incentivizing high order spending

Setting a minimum helps wholesalers attract buyers who can validate their capital investment. The wholesaler also saves time on dealing with many small orders from many buyers.

How to Negotiate Down MOQs

Sourcing products when you’re new to eCommerce can be difficult due to high MOQs. In some cases, though, you can lower the MOQ by negotiating.

Negotiating with wholesalers is most effective during slow sales periods, or for overstocked SKUs. Suppliers in high demand will be less receptive to your offers. And if the seller won’t budge, you may need to pay a higher price per unit.

Here are a few tactics you can try to get a lower MOQ:

1. Present Yourself as a First Time Buyer

Wholesalers look to establish long-term relationships with retailers. This means that, in some cases, wholesalers may be willing to offer you a pass on the MOQ.

Wanting to test the product quality with a small quantity of product is a legitimate request. Say the MOQ is 500 units. You could probably get away with half or a third of that number. The tradeoff is often that you pay a slightly higher price per unit.

Suppliers want orders and are incentivized to establish new relationships. This is especially effective if you can promise to introduce their products to a new market – and promise to return with more business in the future.

2. Ask to Bundle Products

If a supplier carries multiple products you want, you could ask for a grab bag. Bundling different products can increase your total order volume, which may persuade a sale. This approach works best when your order includes low-demand products.

3. Go After The Excess

Sometimes wholesalers are left holding cancelled orders and excess stock. Ask if the wholesaler has any overstocks or cancelled orders you can free them of.

This works best when the products are already made and ready to ship. Since the supplier has already paid for these products, you can usually buy any quantity you like.

How to Talk to Wholesalers About MOQs

It’s important to establish a professional relationship with your supplier. This can be harder than it looks, though.

Wholesales companies are busy places, meaning you may need to follow up multiple times to make contact. You may also speak to a different person every time you call. Keep reaching out until you establish a contact inside the company. In these situations, persistence and professionalism are your best friends.

Cost-effective supplier relations hinge on trust. You need to know that you’ll get your ordered product, after all. On the supplier side, they’ll be more likely to give you a deal if they know and like you.

At first contact, look to get key information from the supplier. Your outreach could go something like this:

“Hi, I’m launching a new {Insert product type} store. I’m hoping to get some information about your wholesale prices and minimum order requirements for the following products:

  • Product 1
  • Product 2
  • Etc.

Thanks for your time!

Your Name”

Be sure to follow up a few times. If you don’t hear back, move onto the next supplier. A company that’s too busy to reply might be unreliable in other ways.

Two Ways to Get Around MOQs

Can’t tolerate high MOQs? You can go through other channels to access the same supply for less.

1. Buy Through a Trader

Trading companies, or traders, act as a middleman between buyers and wholesalers.

Typically, these companies have good working relationships with both wholesalers and manufacturers. This means you can use traders to bypass MOQs, or, in some cases, buy directly from the manufacturer at a steep discount.

Traders also place orders on behalf of multiple buyers at once. When you combine orders, you can more easily meet the supplier’s MOQ and secure lower prices.

Of course, you’ll need to pay the trader for their services. Typically, the mark-up for using traders is around 5%. But traders can get products up to 25% off, so you ultimately come out ahead.

2. Buy on Online Marketplaces

Online marketplaces like Alibaba, AliExpress, and WholesaleCentral often have lower or zero MOQs.

These marketplaces let you source products and compare prices from a wide range of suppliers at once. Convenience plus selection simplifies the process of finding a supplier with MOQs that matches your budget.

Make sure to vet the suppliers you find on wholesaler marketplaces. Fortunately, these sites come equipped with buyer protection features, including:

  • Quality standards
  • Seller authentication
  • Secure payment services (escrow)
  • Seller ratings
  • Buyer testimonials

For tips on wholesaler selection plus a list of top wholesale sites, read our full guide to wholesalers.

What MOQ Means For Your eCommerce Business

What does MOQ mean? That you’re going to have to spend a certain amount to source products for your eCommerce store. Or spend more per unit.

You may be able to negotiate down MOQs. Or perhaps you’ll find a low MOQ on wholesale marketplaces like Alibaba. Before you buy, conduct thorough research into all available prices. A little extra effort on the front end is money in your pocket.

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Minimum Order Quantity FAQ

Why is MOQ important?

MOQ is the minimum you can purchase from a wholesaler at a discounted bulk price. In other words, MOQ is a threshold after which you start to save money per unit.

How do you negotiate a minimum order quantity?

Three tactics work to negotiate MOQ: 1.) Ask to bundle different products, 2.) Present yourself as a first time buyer who wants to sample product quality, 3.) Ask if the supplier has any cancelled orders or excess stock you can buy.