Let’s say you’ve found this really cool product that you’ve started making sales with and is showing some real potential. You check Alibaba and find a supplier that appears perfect, the only problem is they have an MOQ of 1,000.
That’s a little risky for your situation and you were hoping to buy 200 to test the waters first. The good news is that everything with suppliers on Alibaba is negotiable. From the pricing, product materials, lead times, shipping carriers and even the MOQ.
In case you don’t know what I’m talking about, MOQ stands for “Minimum Order Quantity”. This means the minimum number of specific products which can be purchased from that supplier.
The MOQ will vary drastically from supplier to supplier and often the listed MOQ on Alibaba is not set in stone. Some will have a huge MOQ but you can talk them down whilst others will have no MOQ but when you enquire they’ll tell you the MOQ is 500. It can make it very confusing!
Often suppliers will deceptively have their MOQ listed as “one”, however, that may be if you order a sample. Samples will cost much more so be aware of this. For some advice on samples, I suggest you read my article on How to Order Samples from Alibaba the Right Way!
- 1 Why Does Alibaba Have an MOQ?
- 2 Why you Should Order a Lower MOQ?
- 3 6 Ways to Reduce MOQ on Alibaba
- 4 Summary
Why Does Alibaba Have an MOQ?
To understand how to lower your MOQ, first, you need to understand why suppliers actually have an MOQ. There are multiple reasons why an Alibaba supplier will have an MOQ and each will have a different MOQ based on the products and the type of factory they operate.
Although a supplier will have their products listed on Alibaba, they most likely will only have a small batch of each product stored they use for testing and sending samples. It would not make sense for them to produce thousands of each product, store them and hope someone purchases them.
What really happens is when an order is made, they bulk order the necessary materials from other factories to produce the goods in their own factory. Most products have various components and materials that all go together to produce the final product.
For example, if you want to order a specific dog bed from a supplier but you want to reduce your risk and only order 300 instead of the supplier’s MOQ of 1,000. But to make it worthwhile for their company they have to order materials for a minimum of 1,000 units and if you only want 300, they’re left with 700 dog beds they have to store and try to resell.
The factory may need to set up its production equipment, potentially create new molds for the products, train their workers to produce the new products and the list goes on. Essentially, it’s not a good use of their time and resources to produce small batches of products.
Why you Should Order a Lower MOQ?
Even if you’ve thoroughly vetted your list of suppliers on Alibaba, the first time you’re working with a new supplier there is an element of risk. When you’re choosing a supplier to work with, you’re essentially deciding on a business partner that lives in a foreign country. There are a ton of potential opportunities for something to go wrong.
This is why you want to order a low MOQ the first time you work with a new supplier. It’s a way of testing and validating the supplier with minimal risk before you make a large bulk order. You want to:
- Check the quality of the products
- Make sure your customers are happy with the products
- Confirm there aren’t any issues with packaging and breakage during shipping
- Check the shipping times are what they claimed
- Confirm the production and lead times are as they claimed
- See how they handle communication and feedback
- Check the products have all the necessary certificates to get through customs
Even if you do everything necessary to avoid working with dodgy suppliers, they can lie or deceive you in some way. By ordering a lower MOQ you are reducing your risk and verifying the initial order runs smoothly.
My related article I think you’ll love:
6 Ways to Reduce MOQ on Alibaba
There are several tactics you can use to persuade a supplier to reduce their MOQ. Below is 6 of the most effective methods you can try.
1. Ask if they have materials on hand for your product
Often they may have the materials for your specific product available in their factory. If they don’t have to order large batches of materials for you, they will often be able to produce your products at a much lower MOQ.
It’s very common for factories to have various materials in stock for the products they produce. They may not have the exact variant you require in terms of color or fabrics but it might be a worthwhile trade-off if it means you receive a lower MOQ.
If you don’t ask the question, the supplier may have similar materials available but did not realize you are flexible when it comes to small product changes. Using the factory’s materials they have in stock is a win-win scenario for both of you.
2. Give the perception you are bigger than you really are
Even if you’re a complete beginner, never allow them to see that you’re a beginner. You want to give the impression to the supplier that you’re an experienced and professional business.
You want them to feel as though working with you is a great opportunity for their company. Perceiving yourself as a legitimate business that can possibly bring them in a lot of money in the future will provide you with leverage when it comes to negotiating lower MOQ.
Making money off you the first time you make a purchase may not be their priority if they believe there are bigger opportunities from you in the future. They may be happy lowering the MOQ and potentially breaking even on the first sale.
3. Work with smaller factories
Larger factories have very rigid processes in place for how their factory operates. They are less likely to modify their business requirements for you and negotiate a lower MOQ even if they can manage it.
Small factories on the other hand are far more versatile in how their company runs. They may adapt to your business requirements if they can source the materials and still be profitable.
Instead of searching for products on Alibaba, you can filter and search for suppliers. You can then check the number of staff each supplier has which will help you decide which supplier is more likely to lower its MOQ.
4. Work with a Trading Company
Trading companies will usually have lower MOQs compared to manufacturers. The are two main reasons for this:
- They are usually large companies that have built relationships with multiple factories which provides them with leverage when it comes to negotiating better terms.
- Trading companies will be working with a large number of customers so can source the products in bulk and share the order quantity between multiple buyers.
Many trading companies actually have the products in stock which enables them to have no MOQ at all. This will vary between trading companies but is worth being aware of if you’re looking to dropship.
The obvious downside to this is the product pricing will usually be a little higher than a manufacturer but you will receive several benefits for this and it may be a worthwhile compromise. If you’re unsure how trading companies and manufacturers operate I suggest you read this article.
5. Tell them you will be at the Canton Fair
The Canton fair is the largest trade fair for importers and exporters in China and is held twice a year. The biggest industries in China gather at this fair and if your supplier assumes you will be attending shows you are a legitimate business and worth working with.
Ask them if they will be at the Canton fair this year in October (check the dates it’s on to appear genuine) as you will be there and would like to meet them and visit their factory.
Most Westerners have not been to China and have probably never heard of the Canton fair which tells them you are serious about building a business relationship with them. They are far more likely to offer a lower MOQ if they believe they can rely on you for future business.
6. Tell them your first order is to monitor demand
Let them know how your company operates by ordering a smaller batch initially to monitor demand for your specific product among your target audience. This allows you to analyze and test so you can verify how big of a bulk order you will place for your follow-up purchase.
This is a slight exaggeration but is also true. You do need to validate the potential of a product before making such a large upfront investment. Let your supplier know that you plan to make future bulk orders with them but ordering a smaller batch initially makes more sense for your business model.
As you can tell there are several tactics that can be implemented to lower the MOQ on Alibaba. Do not get pushy with the tactics listed above, for many suppliers lowering the MOQ is not a feasible option.
Ideally, you want to work out an order quantity that works for both parties. By trying to deceive the supplier and promising the world after the initial order, you’re only ruining a potential business partner in the long term.
Chinese suppliers do not appreciate aggressive negotiating and by working out a fair MOQ that works together, it may work out more profitably for both of you eventually.