Purchasing a Minimum Order Quantity (MOQ) from a Chinese vendor can be quite inconvenient for up-and-coming small enterprises and large companies alike.
However, there are a few valid reasons why companies prefer to purchase in small quantities sometimes, including:
Trial order – Sometimes it’s a matter of wanting to test out the quality of the merchandise before you place a large order.
Lack of capital – Lack of capital is often a concern for emerging businesses, especially if you’re still testing the waters on a platform like eBay, Amazon or your own site.
Also, you may want to test the market first to make sure that customers respond positively to your product before committing to large amounts of stock.
As you can see, lower MOQ can be a vital aspect of your business. However, the challenge comes when you try to negotiate lower prices with the supplier. Is it absolutely necessary for you to pay more because you’re placing a smaller MOQ? Certainly not! And lucky for you, we’ve got seven handy tips that you can use to hack this whole process.
Let’s get to it!
- 1. Choose the right product
First, you have to do some homework on the product you’ve chosen to find out if there’s demand for it on the market and how much supply there is to meet that demand. What varieties are available and what are the different price points?
It’s generally harder to find unique products that have a lower price and MOQ. By ‘unique’ we mean either a product that’s completely new to the market, with materials and parts that are unstandardized and unusual logo printing as well as personalized packaging. One of the best ways to decrease the MOQ while maintaining a reasonable pricing is to choose one specific product and try to keep it as original as possible.
2. Send inquiries to trading companies and manufacturers
You’ll find that there are quite a lot of trading companies in China that connect clients with manufacturers. While it might seem inconvenient, the service they offer is actually quite beneficial to the market. Working with the right trading company can actually help you to negotiate a better price and MOQ.
What trading companies do is pool together orders of the same product from different clients so that they can place one bulk order to the manufacturer on behalf of the smaller guys. As a result, you can get the small quantities you want at a much better price.
On the other hand, manufacturers are pretty stuck in their ways and probably won’t be willing to give you an MOQ at the prices that you want or need. They prefer taking large bulk orders, even if it’s not OEM. However, the good news is that there are a few smaller factories that you can negotiate with for lower prices.
- 3. Contact more suppliers
We could say that it’s a good idea to approach as many different suppliers as possible, but you have to keep in mind the time factor because in business time is money and you have to be efficient with how you use it. That’s why you should approach at least 10 to 15 different manufacturers and trading companies in the beginning, so that you end up with 5 to 6 suppliers minimum.
This is necessary so that you can get different quotations and it’ll increase your leveraging power when it comes time to negotiate. You’ll also have different MOQ information to compare, which is another advantage.
- 4. Make communication, checklists & negotiations
Even if you are the outright owner and founder of your business, it’s a good idea to introduce yourself to the suppliers as a buyer from the company. Believe it or not, you can use this status as leverage during the negotiation process; because you’ll simply state that you’re not able to make the final decision.
For instance, let’s say that you’re trying to negotiate the same MOQ for a smaller quantity order. You can use your status as a powerless employee to appeal to the supplier’s humanity in saying that you understand where they’re coming from and you would yield if it weren’t for your boss’ insistence. You could even ask them to make an exception just this one time. Believe it or not, this actually works more often than you’d think.
Also, you should use the following checklist when sending an inquiry to a would-be supplier:
- Lead time
- Prices for 3 different quantities (e.g., 100/500/1000)
- Payment options
- Product variations available
- Sample availability
- Shipping methods
- Sample price
Once the supplier has provided the information, you can then start with the negotiations accordingly. For the best result, negotiate with different suppliers and be realistic in your bargaining. For example, if your original request was for 10,000 pcs of a particular product, which cost USD $1 a pop, the price will probably be different for 100 pcs. You might get it for $1.05 or $1.10, both of which are pretty good prices.
- 5. Expand your search and get better quotations
Alibaba.com should be your first choice when it comes to sourcing information about Chinese products. However, if you’ve got a small MOQ, then you should widen your net. Alibaba has subsidiaries like Aliexpress.com that offer great deals on small quantity purchases.
Although only available in the Chinese language, other platforms like 1688.com and taobao.com are all valid options, granted that you’re willing to use Google Translate to help you understand everything. Both platforms offer a handy chat function that buyers and sellers can use to discuss and negotiate prices and quantities.
As you can see, there are plenty of methods that you can employ to negotiate a good price for a lower MOQ, and each method works best for particular suppliers and products. However, you should keep in mind that sometimes getting a lower price for a lower MOQ means a dip in the quality as well. Of course, you can avoid that by maintaining constant communication with the supplier to monitor the progress of the production process, and you can even ask for samples and pictures along the way too!
Hopefully, we’ve provided you with useful and beneficial information, as our goal is to help other business owners to make it no matter if they own a large company or a small operation.
By the way, make sure to leave a comment and let us know what you think, and share the post with friends, family members or colleagues that you think will appreciate the advice as well.