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If you’re brand new to eCommerce, understanding a few fundamental principles will put you five steps ahead of the competition. The Minimum Order Quantity is one of them (MOQ). When you don’t make your goods, such as a dropshipper, MOQ is especially important. Currently, the majorities of online store owners either use dropshipping or purchase stock in bulk from manufacturers.
The problem is that wholesalers almost always expect you to buy a minimum quantity of an item (also known as “minimum order quantity”). In this guide, we’ll look at MOQ and what you need to know about it to run a good shop.
What Exactly Is Minimum Order Quantity?
Suppliers must ensure the viability of their manufacturing processes. As a result, they’re only able to sell a certain number of goods to make a profit.
As a result, a minimum order quantity refers to the smallest volume of merchandise that a retailer can produce and sell to you simultaneously. The sum varies depending on the supplier. For example, a particular supplier can only do business with you if you order 50 or more units.
Some manufacturers, on the other hand, only deal with massive orders of 10,000 units or more. If you only need a certain number of items to stock your Shopify store, the idea of a minimum order quantity can be a pain. Let’s take a closer look.
What’s The Use Of A Minimum Order Quantity?
You may place an order for a certain quantity of products, but the supplier may reject it because it is less than what they have specified. From your view, the supplier seems to be squandering money by sticking to their weapons. Isn’t it a disappointment for both of you? Not always, to be sure.
If the supplier fulfills the small order, they will not be able to profit from the transaction. It will benefit you in the short term, but it will damage your supplier in the long run.
They’ll be out of business before you know it, and you’ll have to find a new supplier. After all, they purchase vast amounts of raw materials and expend a considerable amount of money operating the manufacturing machinery. So, to make a profit, they must generate a certain amount.
As a result, the minimum order quantity benefits all parties. The supplier makes money and remains in business while you keep a reliable supply of products.
In another case, the supplier can ask you to order a specific quantity because that is the most they can get in one go. Their facilities, for example, maybe small, necessitate the production of small batches of items. The MOQ may also benefit your company on its own.
When you buy in bulk, you save money on each item. You use fewer resources to purchase the stock if you meet or exceed the minimum order quantity.
MOQ, on the other hand, isn’t all roses. Setting up your Shopify store can be difficult. This is particularly true if you’re a newcomer to the eCommerce world. If you only have a small amount of money to start with, you can buy a small number of things. Then, as your company expands, you’ll steadily increase the number of orders.
On the other hand, suppliers would be unable to sell to you if they cannot make a profit on the small order you require. If you’re dealing with a problem like this, dropshipping is typically the best option.
How to Negotiate A Favorable Minimum Order Quantity
We made a mistake earlier and forgot to mention anything. MOQ does not always refer to several items. Instead, producers or suppliers may require a minimum order value. That means your order must meet a certain threshold to receive the goods you want.
As a result, if you’re just getting started, you’ll need to work out an order quantity or price that won’t set your Shopify store back. As a result, you must know how to negotiate a MOQ that is compatible with your business strategy.
Fortunately for you, we have a few pointers that will help you secure your stock while still satisfying your supplier. Here are a few strategies for obtaining a favorable MOQ.
Ask If They’re Willing to Reduce the Order Requirement
Before you do something else, inquire with your future supplier about lowering the minimum order quantity. You’ll be delighted to learn that they’re willing to work with you and reduce the MOQ. You must first assess the supplier before proceeding with any further negotiations.
If you ask them, you’ll be able to see if there’s some wiggle room you can deal with. It also doesn’t hurt to inquire. You don’t have to use your negotiating skills right away. It might be as easy as asking a question. If it doesn’t, you can still try a few more strategies.
Pay the MOQ Value But For Your Desired Amount Of Goods
Often you’re dead set on having a certain number of products. This is generally because you don’t have enough room to store any more.
You are meeting the minimum order requirement; on the other hand, maybe a challenge. Inquire with the supplier if you can pay the maximum sum of the minimum order and still receive the specified number of products, even if the total is less than the minimum. It may be more expensive per product, but you will get the exact amount of products you need.
Cover the Set-Up Costs
As previously mentioned, many manufacturers impose a minimum order quantity to break even. The demand for those goods offsets the cost of making those goods. As a result, bringing in a smaller order doesn’t help them. To compensate for this, you might agree to pay for the costs and fees associated with setting up the production run for your smaller batch.
Yes, you’ll pay a higher per-unit price. However, the price you pay now is far less than the expense of meeting the MOQ.
Lower you’re Product Quality
If you lower the product quality, you can remain within your budget and reach the minimum order number. This is because it will save the supplier money and, as a result, the MOQ will be reduced. This is only a good idea if your target market would consider a lower-quality product.
Group Your Order with another Customer
It might only happen once in a while, but if you want to reach the minimum order without paying for everything, team up with another entrepreneur. They are, after all, a direct competitor of yours. However, you may need to collaborate to obtain the exact amount of products you need without breaking the bank.
The disadvantage of this, particularly in eCommerce, is that it is difficult to find a Shopify store owner willing to collaborate with you. Many of them would have their suppliers already. Alternatively, they could be flush enough to satisfy the supplier’s minimum order quantity (MOQ).
Set Up a System For Pre-Orders
If you don’t have enough money to cover the minimum order, you can always ask your customers for help. Create a pre-ordering method. Clients place orders before you receive them. You will use this money to cover the minimum order quantity until you have enough pre-orders. You can then satisfy your clients’ orders once this is in place.
This approach’s disadvantage is that it can be almost impossible to implement if you do not already have a customer base.
When it comes to supplying products for your Shopify store, manufacturers and suppliers must make a profit. They can if there is a minimum order quantity. You will not always be able to achieve this quantity, however.
We’ve looked at some of the forms you can bargain with your favorite vendor. Negotiations aren’t always fruitful. As a result, you’ll have to move on and try working with other suppliers. You can also run your store as a dropshipping operation.