More and more businesses are taking advantage of China’s booming manufacturing industry to source their products. But for small and medium sized enterprises especially, the Minimum Order Quantities (MOQ) required by factories and suppliers can pose significant challenges.
MOQs are a standard practice in the industry whereby factories and suppliers specify the absolute lowest quantity of an item they will agree to produce and sell. Read more about Minimum Order Requirements here. While MOQs may vary from factory to factory and supplier to supplier, it is difficult to bypass this requirement all together. Fortunately, there are steps a buyer can take to reduce their MOQs while still reaping the benefits of overseas product sourcing.
1) Try to negotiate a lower minimum order requirement
The most obvious step is also one of the most often overlooked: Try to negotiate a lower minimum order requirement. Factories and suppliers are under no obligation to “meet you halfway” so to speak, but in many cases an adept negotiator may be able to bargain for a reduction in MOQ by as much as 20 percent.
2) Consider paying a slightly higher price per unit in exchange for a lower MOQ
While this option may not be feasible for many buyers, paying a higher upfront cost for a smaller order can allow buyers to save on transport, storage and other costs in the future.
3) Use standardized components rather than custom ones
If your product requires rare materials or custom designed parts and components, you are likely to run into a higher MOQ than if you opt for standardized or more common parts.
4) Use the same components across product lines
Watches, for example, may be produced with different faces and bands, but with the same inner components, thereby making it easier to meet MOQ requirements for those components.
5) Get quotes from both small and large manufacturers
While larger manufacturing firms are sometimes able to offer lower rates due to economies of scale, smaller firms can often be more flexible on MOQ terms. And smaller firms may be more willing to take on smaller orders than larger firms would. When comparing quotes, don’t forget to survey manufacturers of all sizes.
6) Buy from a trader rather than factory direct
Trading companies, acting as brokers between buyers and factories, can place joint orders on behalf of several buyers at once. This allows a particular supplier’s MOQ to be split among multiple buyers, lowering it for everybody.
7) Source from excess stock
Consider ordering from a factory’s excess stock where possible. When a buyer cancels an order last minute, when a production line is finished behind schedule or does not pass quality control, factories will try to sell the products elsewhere at a lower rate. MOQ and cost tend to be lower in these scenarios, however special attention must be paid to avoid buying defective products.
8) Visit markets in China personally
As the saying goes, “You can cut out the middleman, but you can’t cut out their function.” Buyers who are willing and able to deal directly can visit any of China’s wholesale markets. The Yiwu International Trade Market is the largest of its kind in the world, offering over 70,000 wholesale booths for buyers from all over the world. Buyers who are willing to put in the legwork may be able to get more favorable MOQ terms directly from wholesalers rather than through a middleman.
9) Source from AliExpress or DHgate
Using online marketplaces to source products from China comes with both risks and rewards. Just because an online marketplace has vetted a supplier does not mean you should not vet them yourself. But, at least among properly vetted suppliers, MOQs are often low or even non-existent on online marketplaces.
10) Let Guided Imports manage the sourcing and manufacturing for you
Guided Imports offers an easy, safe and transparent way of obtaining an on-the-ground purchasing and sourcing department for a reasonable cost. There is no surefire method of lowering a supplier’s minimum order quantity. But by hiring an experienced China sourcing company, locally based and professional team, you can rest assured that you’re getting the best quality service for a fair price.