How to decrease a minimum order quantity

by Renaud Anjoran on 26 May 2010

One concern many small buyers have in China has to do with the minimum order quantity imposed by manufacturers. It is actually the barrier that keeps many retailers working with importers/wholesalers. But some smart importers have figured out ways to decrease these minimum quantities.

The Imports Oriental blog wrote two posts (see part 1 and part 2) about this issue in the context of the garment industry, but they are applicable to many other custom-made products.

The key is to understand the reasons behind a minimum order quantity imposed by the supplier.

Usually there is a solid reason. For example, it is imposed by a material supplier. This pops up all the time for garments because controlling the color is difficult when dying a small quantity of fabric. Or sometimes a small metal accessory is out of stock and its manufacturer needs an order of at least 10,000 pieces to launch production.

In these cases, the buyer can use the required amount of that material/accessory across several products. Some of my clients use the same fabric on two lingerie sets, a cami top, a chemise, some suspenders, and even eye covers.

Another solution is to buy some stock fabric, but the customer needs to be quite flexible in terms of designs…

In other cases, the minimum order quantity is an internal organization issue. If the buyer is not in a hurry, production can be spread over a longer period:

It is easier for your supplier to fill a few temporary positions lasting two months than find twenty people willing to work full time for only two weeks.

On the other hand, some factories simply don’t want small orders. They don’t want to focus their attention on very small quantities, at the expense of their main customers’ orders.  Many buyers are tempted to pretend that they will increase quantities over time. But suppliers are often suspicious:

Be careful promising that you will place big orders after your first trial order.  Every factory has heard this story many times.  It is not new.  Be upfront with your plans, but don’t be surprised if they don’t take your future promise of big orders very seriously.

There is one more reason why factories ask for minimum order quantities that are not justified by any external constraint, and that one is not mentioned in the Imports Oriental blog posts. Chinese factories only look at local efficiencies, and it leads them to wrong conclusions. In their mind, large orders that can be processed in big batches drive their unit costs down by 10 to 30%. So they become literally obsessed with large orders.

This can be quite disheartening for importers. There is nothing to do about it… Except maybe looking for other, smaller manufacturers!

  • Orientix

    Some other tips for MOQ issues for garments :

    Not only use the same fabrics for several products, but also try to “rotate” colors in the designs. For instance 1st colorway is red/white, the second colorway will be white/red.

    Also try to limite the number of colors for the group of articles in the same quality. Unfortunately I often have MOQ issues even if the same fabric is used for different articles. This because the designer uses an almost impossible quantity of colors in the designs. Not only the fabrics have minimums, also there are color minimums.

    For all-over prints the minimums can be quite high. Even if the supplier accepts printed fabrics below minimum (With or without an upcharge) you might face a lot of misprints allover the batches. And there is nothing you can do about that.

    Another reason for high MOQ’s might be that the supplier is not interested in the order and/or you as a customer. Usually the high MOQ is accompanied with an unreasonable high price.

  • Renaud Anjoran

    Right, good advice, thanks!

  • Lora Brady

    I often face the MOQ problem due to the LCL/FCL dilemna. The factory that I have been working with for the past 5 years are able to accommodate my small orders. They are aware that to get the big order sometimes there are small orders to fullfill. I face a two sided problem with orders that barely fill even the small 20″ container: (1) Ex -factory to port- trucking; it cost the same for the factory whether it is full or not, they amortize the difference, then add it to the individual cost of the product. (2) FOB China landed USA cost is the same problem as #1. Your freight cost increases when shipping less container load, affecting your final import cost per piece. Best case scenario is consolidating small orders with your other products from the same factory. Our products are stuffed and filled, how does the garment industry deal with shipping flat and folded products?

  • Renaud Anjoran

    Lora,
    Low quantities sure impact the cost of freight per piece. All buyers face this issue, whether they import garments or electronics.
    I think there is a trade-off: either optimize freight costs and risk keeping unsold inventory, or buy only what you know you will sell and pay a little more…

  • Zenny Valentine

    As there are so many competitors around, perhaps small businesses can have a chance to start with little quantity orders to minimise risk.
    I am looking to start my own business working at home, (internet base) and would prefer to start with small quantity.

  • Renaud Anjoran

    Zenny,
    You are right, tough competition is pushing factories to accept smaller orders, especially for off-the-shelf products requiring no customization production. But the constraint is often at the sub-supplier level (i.e. the materials/components factories). Count for small decreases in MOQs, nothing really substantial.

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  • Chris H

    I’m an exporter from China , the MOQ is really a big problem for small buyers , i’v been keep thinking about this since i step in this business field . Sometimes we just lost the potential customer because of the high MOQ . Recently , i cooperated with a small buyer , a retailer , who wants to import fan .He asked about 50 , but with at least 5 different types , that is to say , 10 of each . Of course no factory will do this , MOQ is 200 for each ! I want to accept this order because i believe evety big order begins small . I take a lot time to find a way , do as following : searching the factory first and find the right model for the customer to confirm , then i ask the factory to tell me their wholesalers’ contact information , they also have MOQ , but they are much easier to persuade than factories ! The price is of course higher than the factory , but almost no big difference for the customer . My customer is very happy to get the fan and very satisfied with the price .Foreign customers are never able to find these wholesalers on the internet , let alone some local communication !

    Nobody want to do this because it take time and with little benefit . But what i see is not the present only , i see the future and i believe there will be bigger order if my customers broaden their business with my products !This is a win-win thing !

    I’M Chris , I appreciated every small order , as long as you’re really sincere to do business with me and you do have benefit from the cooperation and me too . My email : chris1990321@hotmail.com , contact if you wanna import from China but don’t have so much money to begin .Just ignore this if you think i;m advertising , i just think that maybe there is such person may need someone like me in China , but don’t know how to find , now i’m here for you .

  • http://www.qualityinspection.org/ Renaud Anjoran

    Chris, thanks for the good tip. I also heard about wholesalers, and I agree that they are not easy to find. Your advice to ask the factory for wholesalers is pretty good.

  • Chris H

    Renaud，thanks . there is still one problem , not all factories do business oversea also do local market , sometimes they only face the foreign market , didn’t have wholesales in China . I have to pick out these first and also have to compare the products and prices , finally pick out the most cost-efficient one to my customer . These works are really impossible for ones oversea . So do u think my idea gonna work well for my future career ? I believe in myself but still want to get some suggestion from others .

  • http://www.qualityinspection.org/ Renaud Anjoran

    Interesting. Yes, many small buyers from other countries would be interested in buying from wholesalers.
    It makes sense particularly in industries where safety standards are not very different from those in China. And for buyers that sell in distribution channels with a quality standard that is not too high.

  • Chris H

    so I and small buyers are looking for eachother , wander how to find them , seems a long way to go , do you have any advice for me ? any information is appreciated ,

  • http://www.qualityinspection.org/ Renaud Anjoran

    Marketing will be a challenge. Try many things and see what works… Good luck!

  • Chris

    Thanks , i’m trying Also good luck for you ,

  • http://www.facebook.com/alex.kim.18847 Alex Kim

    I thought this was about HOW to decrease an MOQ?

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