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Glossary · Operations

What is Minimum Order Quantity (MOQ)?

MOQ is the smallest order quantity a supplier will accept for a given product. It comes from the cost of factory setup, tooling and committing raw material. Ask not only what the quantity is but which variant level it applies to. Committing to a large first buy because of MOQ, on a product that has not been tested, is the most common way cash turns into dead stock.

Detail

MOQ is negotiable and usually comes down three ways: cutting the number of colors and variants, choosing raw material from the supplier's existing stock, and giving ground on unit price for the first run. In overseas sourcing, MOQ and container utilization have to be judged together; a low MOQ paired with high freight can raise total cost. For new products the right order is sample, small test batch, then full MOQ once sales are proven. A supplier that will not flex MOQ at all may be a trading agent rather than a manufacturer.

Example

At an MOQ of 1,000 units and 4 dollars per unit, the first order ties up 4,000 dollars; at 60 units of monthly sales that stock takes more than a year to clear.
FAQ

Common questions on this topic.

How is Minimum Order Quantity (MOQ) calculated?

MOQ is negotiable and usually comes down three ways: cutting the number of colors and variants, choosing raw material from the supplier's existing stock, and giving ground on unit price for the first run. In overseas sourcing, MOQ and container utilization have to be judged together; a low MOQ paired with high freight can raise total cost. For new products the right order is sample, small test batch, then full MOQ once sales are proven. A supplier that will not flex MOQ at all may be a trading agent rather than a manufacturer.

Why does Minimum Order Quantity (MOQ) matter?

MOQ is negotiable and usually comes down three ways: cutting the number of colors and variants, choosing raw material from the supplier's existing stock, and giving ground on unit price for the first run. In overseas sourcing, MOQ and container utilization have to be judged together; a low MOQ paired with high freight …

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