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.

 

Quoting from [tinacao0827]:


I agree with that. We are a Ladies' fashional footwear company in GuangZhou of China. Some of my client place the small orders, but the material supplier can't produce the leather due to the small quantity.

You are right!! Better manufacture large quantities, more profit than small quantities for order. Keep running manufacturing.

 

I am so agree with the writer!!

One of my customer pretended to buy small quantity of our game accessory and ship the good by EMS. He agree with our prices, thought it is OK. But after I inform him the EMS freight. It is too expensive for per piece, nearly has to $4 for each product.

So he cancel  his order, although he think that our prices of products are competitive.

I very strongly agree what you've said above. This is a typical topic among the small quantity purchasers and producers in different countries. Mutual benefit is so important to make a deal.

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?

Quoting from [tianba003]:

I very strongly agree what you've said above. This is a typical topic among the small quantity purchasers and producers in different countries. Mutual benefit is so important to make a deal.

UP1

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.

Hope all buyers understand that .

Replying To [drbob]:

This is exactly what I mean drbob. I have been to a shoe factory (Sports shoes actually), where they were making ONE style in ONE size at a time, maybe 1,000 - 2,000 pairs.


Once done, they then make another size (once more 1,000 - 2,000 pair at a time).


When they are finished, they set up the machines, change moulds etc., to make a different style.


THIS is where their profits are, by manufacturing LARGE quantities at the same time, of the same style. It takes quite some time to set up machinery in the first place.



This is where the system comes in. As Egernia said. The Importer buys shoes by the 40' Container load, then distributes them to wholesalers in smaller quantitries, and this is where people like yourself, who own stores, purchase smaller quantities from. If you want to buy slightly larger quantities, then buy off an importer to begin with.

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 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.

 

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 article.