September 7, 2015 by Andrew Minalto - 8 Comments

Fear of the Minimum Order Quantity on Alibaba!

minimum-order-quantityOne of the biggest problems that many people face when searching for items and suppliers on Alibaba is the MOQ (minimum order quantity). It’s not uncommon for some suppliers to list their MOQ as 500, 1000 or sometimes even higher for very cheap items.

moq-lens-mug

moq-beadsThe usual reaction from people in these situations is to simply scrap any such listings and suppliers. But you really don’t have to, at least not always!

If there’s one thing that I’ve learnt from my many years of importing and teaching others how to import from China, it’s that the MOQ is negotiable.

In most cases it can be cut in half and sometimes even more than that – I’ve seen many occasions with my 60 Day Blueprint customers when the MOQ has been lowered from 500 to 100… it’s all about negotiation!

I did actually cover this at the end of my recent post about Contacting Suppliers on Alibaba, so check that out for a good introduction:

https://andrewminalto.com/dealing-with-chinese-suppliers/

But the method I use in that contact template is only one option – the old ‘small test order progressing to larger orders later’. There are a few other tactics that you can use as well, if for some reason that one isn’t suitable or effective.

Let’s go over some of them now:

  • Ask for a combined MOQ on a mix and match order.

This is when you order a variety of different products from that one supplier, without having to meet the MOQ for each one individually.

This way you don’t have to take a huge volume of one particular product and can instead spread your risk and capital on a more varied product line.

Of course this method won’t work for all products/niches but for some it’s ideal. Let’s say you are ordering an RC car that has an MOQ of 500 pieces but you instead negotiate with the supplier to buy 100 pcs of 5 different models.

  • Say that one of their competitors has offered you a lower MOQ for the same product.

The idea for this method is pretty self-explanatory – nobody likes to turn away business, especially if it’s to a rival!

The key is not to be rude or aggressive when talking to the supplier, as understandably that won’t get a great reaction. Instead you should talk about how you want to work with them, even though another company has offered you a lower MOQ, and ask if they would be willing to match it.

Remember, be polite and reasonable (don’t make threats) and you should see a lot of success with this method.

  • Ask for products that don’t require manufacturing.

Most factories in China will only manufacture products as and when required – as it’s inefficient to keep high volumes of pre-made stock.

And this is usually the main reason for MOQs in the first place, as they need to produce a certain number in one go for it to be cost-effective.

But every now and then, due to a cancelled order or simply excess stock, there will be some products that are already made and ready to ship. Most of the time a supplier will be more than happy to sell these to you at pretty much any quantity, as it’s something they want to get rid of anyway.

Using the same logic as method 3, you can also ask for a lower MOQ and mention that you don’t mind waiting for the next production run of that product. That means that your order will basically be added on to a larger order, so while this will add some delay to the time it takes to receive your items, it’s another useful way of bypassing the MOQ.

So these are the main methods for getting a supplier to lower their MOQ and in the vast majority of cases, they will work.

However what if they don’t and the supplier simply refuses to go below their MOQ, which is out of your reach? Well not to worry, as there are still some alternative options for you:

  • See if that supplier sells on AliExpress or Alibaba Wholesale or simply ask them if they can lower the MOQ if you pay a slightly higher price (as in essence that’s what ordering from Alibaba Wholesale or AliExpress means – a lower MOQ but higher price).

I do consider this option a last resort though, as you really don’t want to increase your per item cost price, as at that point you have to wonder whether it’s worth going ahead with the order, which all depends on the margins and expected profit.

  • Simply find another supplier. This is really just stating the obvious but it’s very rare to find a product for which there is only one manufacturer. And you can often get a very different response from two different suppliers, so don’t think that because one said no they all will, as that’s not how it works at all!
  • Use a trading company. Again, I don’t really consider this a great option as while trading companies can offer lower MOQs (they order from the factories themselves but then split that order for multiple customers) there are a lot of negatives that go with that.

This includes more risk, consistency problems, lack of quality control, difficulty in verifying who exactly you’re dealing with and difficulty in arranging inspections.

So all in all, not an ideal option and not something I usually recommend, though it can sometimes be a way to get started.

And that brings me nicely on to a cautionary note that I wanted to be sure to include in this post, which I briefly touched upon earlier:

While negotiating the MOQ with a supplier is perfectly fine, you do have to weigh up the pros and cons and consider whether or not it’s worthwhile in certain cases – in terms of the effect on your per item price.

After all, you’re never going to get the absolute lowest price when buying below the MOQ – that’s only possible with orders many times higher than the minimum.

But as well as that, you also have to consider shipping as the bigger the order the cheaper the shipping cost per item. This is especially true with sea freight, as a large proportion of your bill is made up of fixed costs (customs clearance, port fees, documentation fees etc.) and only a comparatively small amount is the actual freight!

This means that sometimes it’s simply not worth it to order a small quantity of a certain item, as when everything is added up, you can be paying quite a premium on the landed price, making you unable to compete with other sellers buying in true bulk quantities.

So while negotiating MOQ is an option, and something that I often recommend, it’s not always an ideal solution and you may be better off either:

Saving up to increase your buying power

OR

Looking for a new product/niche

The latter option is probably what I’d advise in most cases, as some niches just aren’t suited to lower budgets or when you’re just starting out. In these cases it’s better to start with more viable options and work your way up – after all it is much better to be in the position of ordering 2-3x MORE than the MOQ as then you can negotiate the price and terms to suit you.

And that brings us to the end of today’s post. I hope you found it useful and learnt how you can beat the listed MOQs, and even more importantly – why you might not want to. 😉

As always, if you have any questions at all, or would simply like to share your experiences negotiating MOQs with Chinese suppliers, then just post in the comments section below and I’ll get back to you personally.

Otherwise, until next time!

All the best,
Andrew

8 Comments
Click Here to Leave a Comment

  1. Juan Manjarres

    Hi Andrew,
    Are you able to tell me what are all the licenses that you need in order to buy from alibaba living in the us..
    I know i have a business license … does the busines license need to be for distribution …

    I plan on opening a shopify store but iI would like to place orders in small numbers …
    so i can see the product first..

    what other licenses and fees …
    I live in Florida

    Kind Regards
    Juan

    1. Andrew Minalto

      Hi Juan,

      You don’t need ANY special licences to order every day products from China, Alibaba.

      You don’t even need to have a company – you can start importing as an individual, that’s perfectly fine.

      Thanks,
      Andrew

  2. Andrew

    Thanks for the article. I have a question and hope I can get some advices from you. I have two suppliers who manufacture the same product in China. It”s hard to decide to place order with which supplier for various reason ( communication, price; facility etc…) In order to minimum the risk, I am thinking about splinting my order between these two suppliers. Is it practical to do so? It might increase my cost by hiring third party inspection to do quality inspection in two places. Another worry is about shipping. Is it possible to have logistic company to arrange the pickups from two difference locations. Have you experienced yourself. Love to hear from you. Thanks Bo

    1. Andrew Minalto

      Hi Bo,

      Thanks for your comment.

      I personally wouldn’t do that. Ordering from 2 companies will increase inspection cost, shipping cost PLUS you may get 2 different quality products at the end.

      I would just pick one/best and order full order from them.

      Thanks,
      Andrew

  3. Hey Andrew,

    I have for a question for you in terms of shipping my friend.

    Now I know there are extra fee’s we have to pay in terms of pre-shipping quality control and post shipping quality control, but in terms of the actual shipping costs itself, does the shipping fee that the company your dealing with cover all the costs of shipping or do you have to organise stuff on the side yourself too?? For example you talk about “fixed costs (customs clearance, port fees, documentation fees etc.) “, is this all included in the fee that the company you source from quotes you for?

    Thanks very much in advance for your assistance.

    Thiru

    1. Andrew Minalto

      No, it’s not included in the shipping price you get from a supplier. Supplier usually just asks for shipping fee (if you don’t organise shipping on your own).

      Customs clearance, taxes and everything else in the UK is extra cost you’ll pay.

      If you organise shipping on your own – via a freight forwarder company, you can ask them for a door to door quote which will include some of these additional fees. VAT and import duty is always a separate cost you pay when goods arrive in the UK.

      Andrew

  4. Hi Andrew,

    thank you for the excellent – as usual- article. I have some ideas that I would like to share with you.

    1) There are a lot of drop-shippers from China that are selling at the ebay.com and
    operate under the same principle as Aliexpress. They usually cooperate with
    a factory in China (e.g., Shenzhen) and have the manufacturer produce a certain quantity of a specific product. The factory does the fulfillment while the CHINESE ebay seller does the marketing
    and sales part.

    Is there any way to convince china manufacturer to do the same with new ebay startups in other countries? Here is an example for a chinese ebay seller that drop ship on ebay.com:

    http://www.ebay.com/itm/201253495057

    This seller buys from a factory in Shenzhen and the factory has the fulfillment
    done. I know for a fact that this item can be bought in bulk quantity for 0.3USD. So
    they both make a nice profit. And, the Ebay selling price is still very cheap.

    2) The most suppliers on alibaba.com are traders and not manufacturers because they sell many different products. A REAL manufacturer that sells keybords (as an example) cant also sell watches!
    These are wholesalers.

    Is there a way to figure out the real manufacturer from the wholesalers?

    Best regards

    1. Andrew Minalto

      Hi Nazar,

      Thanks for your comment.

      1) Well, you probably already know my views on dropshipping, if not, take a look @ this article:

      https://andrewminalto.com/dropshipping-business-model/

      I don’t really know how viable it is to work with a manufacturer on a dropshipping model. With trading companies, wholesalers – yes, possible but true manufacturers in most cases won’t take on the hassle on order fulfilment. But as I said, I have never really tried this approach so have no experience with it.

      2) If you do an inspection on the company you’re interested working with, inspection report will clearly show whatever it is a true manufacturer (with a factory, R&D department etc.) or is it just a wholesaler/trading company.

      Thanks,
      Andrew

Leave a Reply