All those people who keep posting questions as to why they have to buy MOQ and cannot just buy smaller quantities?

The answer is quite simple. Most factories in China do not carry any stock. They manufacture to Order. When they receive an order, they set up the machines and start manufacturing.

AN EXAMPLE:
We have a plastic bag factory in China. Let's assume you want 5,000 with 3 colour print shopping bag. First, the machines are set to manufacture the required size. This means, stop,start,stop,start the machinery, until the required size is produced. Then, after they are made, they go over to the printing shop. The printing press is set up, (usually takes about half to one hour).and printing starts. Once again, it is a stop start process, until the plates are lined up to print the required logo in 3 colours. Once achieved, the presses keep running. At the end of this, it takes about 1-2 hours to clean the machines of the ink colour used, as the next print job may be a different colour. So, it could take about half a day to print just ONE job. For a quantity of 100,000 bags, this may be O.K. But for 5,000? NOT economical

Then, next, there are PORT CHARGES. Let's assume these are $100. Divide $100 by 5,000 bags, adds about 2 cents per bag. On 100,000 bags however, it only adds 0.1 cents per bag.

I think you get my drift here.
If I was to quote you $100 per 1,000 bags for a quantity of 5,000 would you buy them?
If I quoted you $40 per 1,000 bags for a quantity of 100,000, sounds better doesn't it?
If I quoted you $20 per 1,000 for a million bags, even better.

There are static fees and charges for any manufacturing process, and the less you want, the more it will cost to manufacture these. Charges like machine time, wastage, Trucking Fees, Port Charges, Freight etc.

Manufacturers world-wide, work with large quantities.

If you own a little shop somewhere, and want small quantities, go buy from a local wholesaler who buys larger quantities from an Importer, and who, in turn, buys even larger quantities from the manufacturer. Don't expect to get cheaper prices for small quantities by going direct to the manufacturer.

And, oh, by the way, at your end, you have more static charges, like Clearance Fees, Port Charges etc, which are almost the same whether you bring in 5,000 pieces or 1 million pieces. Add these costs to your purchase price too.

In the long run, you will pay MORE for small quantities you buy overseas, than you would from your local wholesaler.

Quoting from [grigo]:


All those people who keep posting questions as to why they have to buy MOQ and cannot just buy smaller quantities?


The answer is quite simple. Most factories in China do not carry any stock. They manufacture to Order. When they receive an order, they set up the machines and start manufacturing.


AN EXAMPLE:

We have a plastic bag factory in China. Let's assume you want 5,000  with 3 colour print shopping bag. First, the machines are set to manufacture the required size. This means, stop,start,stop,start the machinery, until the required size is produced. Then, after they are made, they go over to the printing shop. The printing press is set up, (usually takes about half to one hour).and printing starts. Once again, it is a stop start process, until the plates are lined up to print the required logo in 3 colours. Once achieved, the presses keep running. At the end of this, it takes about 1-2 hours to clean the machines of the ink colour used, as the next print job may be a different colour. So, it could take about half a day to print just ONE job. For a quantity of 100,000 bags, this may be O.K. But for 5,000? NOT economical


Then, next, there are PORT CHARGES. Let's assume these are $100. Divide $100 by 5,000 bags, adds about 2 cents per bag. On 100,000 bags however, it only adds 0.1 cents per bag.


I think you get my drift here.

If I was to quote you $100 per 1,000 bags for a quantity of 5,000 would you buy them?

If I quoted you $40 per 1,000 bags for a quantity of 100,000, sounds better doesn't it?

If I quoted you $20 per 1,000 for a million bags, even better.


There are static fees and charges for any manufacturing process, and the less you want, the more it will cost to manufacture these. Charges like machine time, wastage, Trucking Fees, Port Charges, Freight etc.


Manufacturers world-wide, work with large quantities.


If you own a little shop somewhere, and want small quantities, go buy from a local wholesaler who buys larger quantities from an Importer, and who, in turn, buys even larger quantities from the manufacturer. Don't expect to get cheaper prices for small quantities by going direct to the manufacturer.


And, oh, by the way, at your end, you have more static charges, like Clearance Fees, Port Charges etc, which are almost the same whether you bring in 5,000 pieces or 1 million pieces. Add these costs to your purchase price too.


In the long run, you will pay MORE for small quantities you buy overseas, than you would from your local wholesaler.

can' t agree  with you more!

Yes, very good article!

Useful and meaningful!!

Hi,

I would need some advice from you guys. I would like to purchase some iron weights from a supplier to sell in my country. However their MOQ is 3000kg, this is too large an order for me to purchase and I do not have the capital.

The problem is that there are NO other sellers/wholesalers/distributors that sell these iron weights in my country. So in a way, you can say that if I do get these iron weights into my country, I would be the sole seller. Of course if I do make profits and demand is high, I would make bigger orders, but 3000kg is too large for a first time order.

How can I convince my supplier to sell a lower quantity to me?

Replying To  [saul_ezer]:

Very good point, and you have hit the nail on the head.

"Quote me the setup cost and I will pay for it". You don't get many people who are prepared to do this.

If you came to me with a proposition like this, I would certainly work with you, as I understand that sometimes you must plant a seed in order to get a tree.

At least you understand the situation and are prepared to compomise. I have had customers like this in the past, and we have worked together and grown together.

The article is aimed at people who exprect the manufacturer to cover all the setup costs and then want to pay the same price for very small quantities as they would pay for large quantities.

 

The MOQ is really a problem, especially for the cosmetics, we need too much quantity to order the packaging from factories.

makes perfect sense...

Quoting from [grigo]:


All those people who keep posting questions as to why they have to buy MOQ and cannot just buy smaller quantities?


The answer is quite simple. Most factories in China do not carry any stock. They manufacture to Order. When they receive an order, they set up the machines and start manufacturing.


AN EXAMPLE:

We have a plastic bag factory in China. Let's assume you want 5,000  with 3 colour print shopping bag. First, the machines are set to manufacture the required size. This means, stop,start,stop,start the machinery, until the required size is produced. Then, after they are made, they go over to the printing shop. The printing press is set up, (usually takes about half to one hour).and printing starts. Once again, it is a stop start process, until the plates are lined up to print the required logo in 3 colours. Once achieved, the presses keep running. At the end of this, it takes about 1-2 hours to clean the machines of the ink colour used, as the next print job may be a different colour. So, it could take about half a day to print just ONE job. For a quantity of 100,000 bags, this may be O.K. But for 5,000? NOT economical


Then, next, there are PORT CHARGES. Let's assume these are $100. Divide $100 by 5,000 bags, adds about 2 cents per bag. On 100,000 bags however, it only adds 0.1 cents per bag.


I think you get my drift here.

If I was to quote you $100 per 1,000 bags for a quantity of 5,000 would you buy them?

If I quoted you $40 per 1,000 bags for a quantity of 100,000, sounds better doesn't it?

If I quoted you $20 per 1,000 for a million bags, even better.


There are static fees and charges for any manufacturing process, and the less you want, the more it will cost to manufacture these. Charges like machine time, wastage, Trucking Fees, Port Charges, Freight etc.


Manufacturers world-wide, work with large quantities.


If you own a little shop somewhere, and want small quantities, go buy from a local wholesaler who buys larger quantities from an Importer, and who, in turn, buys even larger quantities from the manufacturer. Don't expect to get cheaper prices for small quantities by going direct to the manufacturer.


And, oh, by the way, at your end, you have more static charges, like Clearance Fees, Port Charges etc, which are almost the same whether you bring in 5,000 pieces or 1 million pieces. Add these costs to your purchase price too.


In the long run, you will pay MORE for small quantities you buy overseas, than you would from your local wholesaler.

good post.. learn from it!

Quoting from [grigo]:

yes , you are right.

Many client ask us to keep the same price on their small order, i need to tell them why we can not keep the price.

now , i can copy you text and get in a record , so that i can save some time to write, ha ha.

thanks.

Quoting from [saul_ezer]:

Good article; however, if I want to do Research and Developement (R&D) and I am willing to pay for 1/2 day setup charges you will loose my business.  I would prefer that you quote $$ for setup.  $$/1000 for quantity 100,000 and $$/1000 for quantity 1,000,000.  Because if you don't, someone else might.  And they will have my business when I order 100,000,000.

 

I think this is the perfect point of view. No offense but it seems that every seller concentrates to out of scale quantities. Let's don't forget: no one can start at the top  unless you dad has the $$$$$$$ and you just keep doing the business after daddy retires. I saw an offer here on Alibaba for semi trailers (valued at $35000) and the MOQ was 500 pieces. I'm sure there is a mistake but will you ask for a price, even if they state that last year they sold 20 000 pieces?

Quoting from [Egernia]:

Quoting from [drbob]:

But, let us take shoes for instance, if you have a small store and only need 1,000 pairs. Say 40 each of 25 styles, you need not be bothered by the moq if you do not have to sell under your own logo.  The factories turn down small orders all of the time, but are missing this source of profit.  If the vendor would show you the styles involved in a big order, then you could order a thousand of the shoes they are already making.  You get small order and they get additional profit with no set up costs at all.  Wonder why companies in which this can be done do not think of it.

Drbob that is what wholesalers and distributors do....not manufacturers.

Manufacturers generally produce at cost plus a low margin and make their money on large quantities.

Wholesalers/distributors buy these large quantities at these low prices and then incur stock investment, storage, and distribution costs in bringing those products to their market. They offer at cost plus a much higher margin as they sell smaller quantities of each style.

Retailers such as yourself then swoop in and buy what you can sell in a short period of time in the hope that you dont have a lot of money tied up in stock that sits on the shelf...and you sell for costs plus a relatively higher margin.

Final customers pay the highest price with no MOQ requirements and with the convenience of immediate pick up and no long term investment.

So which level you buy at should determine how you buy.

I believe that Grigo's point here is that you cannot expect to jump the queue in the distribution process and buy under the terms that you now buy under. As a retailer you pay a certain price for your product but you get the advantage of being able to buy small quantities of each item. If you want to make the jump to buying from manufacturers then that means that you are no longer a retail buyer but a wholesaler so the terms of purchase change.

On the whole factories in China are not desperate for business in my experience. You may get that impression as the sales staff seem desperate for orders to improve their commissions, but in many cases the factories are already busy.

So assuming that a factory is already busy making money through the channels that they are comfortable making money through i.e. sales to wholesalers; what makes you think that they would be interested in changing all of this to get an order from a new, 'small' customer?

TOTALLY AGREE!!!