minimum order quantity (MOQ) - Alibaba Seller

Minimum order quantity (MOQ) is the lowest number of units a wholesale supplier allows buyers to purchase at one time. This concept is also ... BusinessBlogsWholesaleTipsWhatisminimumorderquantity(MOQ)?Whatisminimumorderquantity(MOQ)?Alibaba.comNOVEMBER19,20208 MINREADWholesaledistributorsputdifferentregulationsandrestrictionsinplacetooperateasefficientlyaspossibleandmaximizeprofits.Onepracticethattheyuseiscalledminimumorderquantity,orMOQforshort. MOQsaffectbothbuyersandsellersintheB2Bmarketplacesoitisimportanttoknowhowtousethismeasuretoyourbenefit,nomatterwhichsideofthesaleyou’reon. Inthisblogpost,we’regoingtounloadeverythingyouneedtoknowaboutminimumorderquantities.WewilltalkabouttheimportanceofMOQforbothwholesalesuppliersandbuyers.Towrapthingsup,we’lltakeacloselookattherelationshipbetweenMOQsanddropshipping. Let’sgetstartedbyexploringwhatexactlyminimumorderquantitymeansinthewholesaledistributionindustry. TableofContents Whatisminimumorderquantity? TheimportanceofMOQforwholesalesuppliers TheimportanceofMOQforbuyers MOQsanddropshipping Finalthoughts Whatisminimumorderquantity? Minimumorderquantity(MOQ)isthelowestnumberofunitsawholesalesupplierallowsbuyerstopurchaseatonetime.Thisconceptisalsooftenreferredtoas“minimumorderpolicy.” Suppliersputthisrestrictioninplacesothattheyarenotwastingtimeandresourcesonordersthatwoulddeliververylittleprofit.Thisconceptisverystraightforwardandisusedbywholesalersaroundtheglobe. Toputthisconceptintoperspective,let’spaintapictureofaclothingretailer,TeeWorld,placinganorderoft-shirtsfromSupplierWorld. TeeWorldwantstogetanewt-shirtstyleinstocktoexpanditsseasonalcollection.Theyaren’texactlysurehowthecollectionwillgooversincethey’veneversolditbefore.TheyturntoSupplierWorld,theirtrustedwholesaledistributor,toseethesmallestordertheycanplace. SupplierWorldletsthemknowthatthereisaMOQof200shirts.ThismeansthatunlesstheycannegotiateadifferentdealwithSupplierWorld,TeeWorldmustbuyaminimumof200shirtsperorder. Somewholesaledistributorswillallowbuyerstobuyasmallquantitysampleofthisproducttomakesureitiswhattheyarelookingfor,buttheywilllikelyhavetopaytheretailpriceratherthanthewholesaleprice. TheimportanceofMOQforwholesalesuppliers Thegoalformostbusinessownersistomaximizeprofit.Whenitcomestowholesaleproductionanddistribution,alotofprofitmaximizationisdeterminedbyhowmanyunitsofanygivenproductisproducedandkeptinstock. Inordertokeepapositivecashflowandgrowyourwholesalebusiness,youmustbestrategicwithyourMOQs. WhysetanMOQ? Wholesalesuppliersandproducerssetminimumorderpoliciesinordertomakesuretheyareturningaprofitoneverysingleorderthattheymake. Oftentimes,themoreyouproduceofsomethingthelessitcosts.Thishastodowithproductioncomponents,likecostsoflabor,rawmaterialsandphysicalcapital. Forexample,producersmayactuallylosemoneybyproducing10unitsofagood,sotheyneedtomake30tobreakeven.Iftheyaregoingtolosemoneybyselling10units,itdoesn’tmakemuchsense. That’swhytheminimumorderpolicyisputintoplace. Howtodecideyourminimumorderquantity? ThereisnosetformulathatsuppliersusetodeterminetheirMOQ,butgenerally,suppliersusethebreakevenpointonthespecificproductasastartingpoint. Let’sgobacktotheSupplierWorldt-shirtexampleforamoment.Iftheybreakevenat100shirtsandseeaprofitat101shirts,100t-shirtsshouldbetheabsolutelowestquantityorderthattheywouldfulfill. However,iftheyonlymake100-unitorders,theywillnevermakeanymoney.Thismeansthatkeepingyourminimumorderpolicyatthebreakevenpointisnotsustainable. IfSupplierWorldsetstheMOQoftheset-shirtsat200,theywilldefinitelymakeaprofit.Additionally,theywillhavealittleflexibilitytoofferlowerquantityordersinspecialsituationswhilestillmaintainingapositivecashflow. Asasupplier,youhavethepowertosetyourminimumorderpolicyatwhateveryouseefit.Youhavetodowhatmakessenseforyourcompany. HowtosetMOQasaselleronAlibaba.com AsaselleronAlibaba.com,itiseasyforyoutodefineyourwholesalepricingrulesandsetyourMOQusingtheintelligentproductpostingtool. Inadditiontominimumorderquantities,italsoallowsyoutosetvolume-basedladderpricingandgivetheflexibilityyouneedtosimplifyyouroperations. ProvidingdetailedservicesinformationaboutyourminimumorderpolicyandwhetherdropshippingissupportedonyourAlibaba.comstorefrontisalsousefultoaddressanycommonquestionsanddrivetrustbetweenyouandyourbuyers. TheimportanceofMOQforbuyers Asabuyer,youmaybewaryofpurchasingalargequantityofitemsthatyouareintroducingtoyourstoreforthefirsttime.Withminimumorderpoliciesinplace,itmaybedifficulttoplaceanorderwithyourintendedquantityifit’slowerthanwhatsellersarewillingtofulfill. Fortunately,theremaybewaystogogetaroundMOQsthatarehigherthanwhatworksforyou.Youcaneitherfindasellerthatoffersalowerminimumorderquantity,oryoucannegotiatetotrytomaketheorderworkforyou. HowtofindlowMOQsellersonAlibaba.com IfyouareabuyerlookingforlowMOQsellersonAlibaba.com,you’reinluck.Itispossibletofindsellerswithminimumorderquantitiesaslowas5or10unitsperorder. HereisasimplerundownonhowtofindlowMOQwholesaledistributors. Gotothe“ReadytoShipChannel”atAlibaba.com/bulk Typeintheproductyou’relookingforinthesearchbar Indicateyourdesiredquantityinthe“MinOrder”field Browseoptionsandselecttheoneyoulike Oftentimes,ifyoucheckthe“ReadytoShip”box,you’llfindplentyofproductswithlowerminimumorderquantitiesandarereadytobeshippedoutwithin15days. Ifyoucannotfindwhatyou’relookingforwiththesesearchfilters,raiseyour“MinOrder”criteriauntilyoufindtheproductthatworksforyou.Or,youcanalsomessagethesupplierdirectlytoseeifthereisanyflexibilityinthisnumber. AnotheroptionispostinganopeninquiryintheRequestforQuotation(RFQ)marketwiththeprecisequantityyou’relookingtoorder.Thatway,thesupplierknowsthequantityyouwantfromthestartandcanchoosewhetherornottheyfulfilltheorder NegotiatingMOQswithsellers Aswementioned,insomeinstances,itisappropriatetonegotiateMOQswiththeseller.Itisimportanttoberespectfulandprofessionalifthisistherouteyouwanttotake. Forexample,iftheMOQissetat5000,itisreallynotappropriatetoaskforanultra-loworderquantityof200unitsatwholesaleprice.Youcouldaimforbetween3000and4000thousandunitsifthatisanumberyouarecomfortablewithsincethatismuchclosertotheseller’sMOQ. Besuretoexplainyoursituationandaskpolitely.Manywholesaledistributorswillbewillingtoworkwithyouifitmakesfinancialsenseforthem. Ifyouwantacoupleofunitstotestout,consideraskingifyoucanpurchaseafewattheretailprice.Manysupplierswillmakethisoptionavailableontheirlistings,soitisdefinitelyareasonableask. Ifasellerdoesnotrespondtoyourrequesthowyouhopedtheywould,thankthemandmovealongwithgrace.Atimemaycomewhenyouwanttoworkwiththatsupplierinthefuture,soyoudon’twanttoburnanybridges. MOQsanddropshipping Dropshippingisabusinessmodelwhenaretailersellsagoodthattheydon’thaveanyinventoryof.Essentially,theretailerprovidesthedigitalstorefrontandtheorderisfulfilledbyathird-partydistributor. Whenitcomestodropshipping,thebuyer-sellerdynamicchangesabit.Itbenefitsbothpartiestodevelopalong-termrelationship,soflexibilityoneitherendisideal. Dropshippingrequiressmallquantityorders,butthepotentialofasuccessful,long-termarrangementcouldjustifytheinitialinvestmentontheseller’sside. Notetosellers:Behighlyselectivewithwhoyouworkwithondropshippingprojects.Makesurethatyou’refocusingonhigh-qualitybuyerswithasolidstrategyandoperation.Sinceyou’lllikelybestartingwithsmallquantitiesofunitsineachorder,you’relikelyholdingoutfaiththatthearrangementwillturnintosomethingthatisprofitableforbothofyou. Finalthoughts MOQsaresetinplacetohelpwholesaledistributorsmaintainsustainablebusinessmodels.However,ininstanceswherethebuyerandsellerhavesubstantialprofessionalhistory,thesellermaybeflexiblewiththeserestrictions. Thekeyhereforallpartiesinvolvedistoberespectfuloftheother’stime,moneyandresources.Relationshipswiththatmutualrespectatthecorehavethepotentialtoflourishforyearstocome. Readytotakeyourwholesalebusinesstothenextlevel?ContactusnowtostartsellingonAlibaba.comtoday! 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