I may earn a commission from any purchases made as a result of content displayed anywhere on this blog post.
For many beginners to the Amazon FBA journey, the MOQ terminology is unfamiliar. So in this simplified blog post, I’ll define and share my experiences.
I’ll also show why MOQ’s are important, why Chinese suppliers set these for Amazon sellers and how to meet these. Most importantly, I’ll highlight how you can start negotiating for lower MOQs. 😉
MOQ means Minimum Order Quantity
As you’re new to sourcing and importing products, let me guide you here.
MOQ stands for Minimum Order Quantity. It’s essentially the lowest amount of products or units that a factory would be willing to produce. The reason they do this is to cover their production costs.
For example, a Chinese supplier might realize that producing just 300 units at their normal price is break-even. Since a production run takes several hours of setup and coordination. So they might set their MOQ at 500 units which you’ll typically find on Alibaba.
Others don’t use a unit count, but a dollar amount. This is
Each supplier is different. This is because products vary massively. Some might even say 2,000 units or 5,000 units. Others might say a full 40ft container minimum.
Minimums from suppliers is a good thing. It ensures that they remain profitable for the long term. Success should be found for both your Amazon business, but your suppliers business too.
You can best meet MOQs for your Amazon business but choosing a product that fits within your launching budget. Avoid oversized products such as outdoor tables, as while the MOQ might only be 200, you probably can’t afford the $90 unit cost. I also advise beginners to start with something simple, before building up the courage for big products.
The best part! This is where we can negotiate our MOQ. Because your Chinese supplier might say that theirs is 500, but you can only afford 300 to get your product off the ground.
Some ideas are:
- Do a split-order. If the MOQ is 500 units, then say you’ll order 250 today and 250 next month.
- Claim that you don’t have the space to store 500 units, which has some truth to it, as Amazon’s warehouses do charge you storage fees.
- Crowd-fund or pre-sell orders. This has become very popular with websites such as Kickstarter
- Ask if they have lower-quality materials if they will still represent a good quality product. This won’t reduce the
MOQ,but can reduce the unit price.
- Offer to pay more money. Say it’s $10/unit for 500 units. Propose you’ll pay $12/unit for 100 units, so you can get started for $1,200.
- My personal favourite: Say that you’re testing a new product range and unsure if your market will like your offering. Promise future orders if successful.
Ruslan Kogan, the creator of Kogan.com actually negotiated one of his first ever orders of televisions. With no real business experience or customer database. He simply went and re-wrote the poor-quality English information on a supplier’s Alibaba page, who then subsequently won a massive USA contract weeks later. They provided Ruslan with anything he wanted (best pricing, 1st on production line,
Things to look out for
Often people do want a lower MOQ than advertised. Most people have limited starting capital to start their new Amazon FBA business. So, it’s tempting, but there’s 2 issues:
- Suppliers will often compromise on the quality of products, because they are already at cut-throat profits and need to make up the margin.
- They might reject the future chance to do business with you, as they have existing customers who always meet those MOQs.
So please be understanding of these characteristics. You should want success for your factory, as much as you want for your own business. It’s a two-way street.
MOQs are a fundamental part of your sourcing experiences when launching your new Amazon FBA business. It’s wise to abide by them and choose products that can fit within your budget and supplier MOQs.
Always be willing to find a different supplier if things aren’t working out. If you decide to negotiate, then tread carefully to make sure the product quality is top-nitch.