- September 6, 2021
- Posted by: A4P
- Category: Dropshipping
If you’re still not clear how this relates to dropshipping, keep reading.
In this blog, we’ll go through what it really is, whether you need it, as well as how to negotiate the MOQ with suppliers.
What is a Minimum Order Quantity?
Thus, a minimum order quantity refers to the smallest number of merchandise that a supplier can produce and sell to you at the same time. The amount varies depending on the supplier. For example, a certain supplier may only do transactions with you if you purchase 50 or more products.
Meanwhile, some manufacturers only negotiate with bulk orders of 10,000 units or more. If you just need a certain number of items to populate your online store, the idea of a minimum order quantity may be a nightmare.
Is there an MOQ for dropshipping?
If you’re aware of the dropshipping business model, you might be asking why you’d want to purchase things before selling them. Isn’t it a little counter-intuitive?
There is usually no minimum order quantity for dropshipping because a dropshipper does not have to buy anything from a supplier in order to sell goods from it.
But, when dropshipping with a MOQ, make sure your potential supplier first and foremost allows dropshipping.
The only distinction between this and the traditional technique is that your source will need you to buy the MOQ in advance. You won’t be able to hold the stock in your hands. Yes, most products listed on Alibaba, for instance, may be found on AliExpress without a minimum order quantity.
So, why would you want to take such a risk in the first place?
What’s The Use Of A Minimum Order Quantity?
If the supplier meets that little purchase, they may not be able to make a profit on the deal. It will benefit you in the short term, but it will harm your provider in the long term.
They’ll be out of business before you realize it, and you’ll have to find a new supplier. As a result, the minimum order quantity benefits both parties. The supplier makes money and stays in business, while you keep a reliable source of goods.
Why a seller would want an MOQ
A few of the reasons you’ll usually discover better costs with merchants who require a MOQ is that their manufacturing process is more efficient, resulting in less waste.
Easier for logistics
This is a far simpler logistical procedure than a vendor handling hundreds of times more orders placed per day. When shipping in bulk, the seller might also benefit from lower prices.
Reasonable profit margins
As previously said, working with exact numbers makes manufacturing and logistics far more productive, decreasing repetition and waste. This increases the profit margins of the sellers; these savings can and typically are passed on to the customers.
Why a buyer would want an MOQ
More affordable prices
Alibaba is most likely the source of AliExpress sellers. The only distinction is the outrageous price. This is likewise done by a big number of Amazon stores.
Cost-cutting on delivery
Larger suppliers typically have special rates with their couriers and do not benefit from this component of the contract. They’ll also be aware of the most cost- and time-effective carriers.
Furthermore, when purchasing from B2C providers, some can be rather devious with their price, focusing purely on shipping profits. This may change, making it more difficult for purchasers to price their goods appropriately.
When buying a MOQ, the buyer, like the seller, can profit from a long-term business relationship. This demonstrates to the vendor that you are committed, which they will value.
Understand that a supplier’s records are normally on display for everyone to see, but they have no knowledge of you. As your relationships grow stronger, you’ll be offered better rates, newer items, and even a higher level of service.
How To Negotiate A Favorable Minimum Order Quantity
Don’t worry, we’ve got you covered, so continue reading!
Is dropshipping covered?
The first thing you must ask your supplier is this one. Dropshipping isn’t possible with every supplier. It’s a lot of additional work from their viewpoint, and the juice may not be worth the squeeze for them.
Several suppliers who don’t allow dropshipping will refer you to a reputable fulfillment center or a dropshipping agency. So keep an open mind about the possibility.
Request a lower MOQ
Maybe you can’t fulfill the MOQ because of your personal financial constraints, or maybe you’re just not sure you’ll be able to sell that many things to start with.
On the initial order, most suppliers would agree to a lower MOQ in the hopes of future business. This extra bit of work for such little benefit is generally viewed by suppliers as a long-term investment.
So inquire around, send different suppliers a message with your counter-proposal on the MOQ, and you’ll be surprised at how accommodating they are.
Talk about the shipping
You could be cutting into your profit margins without you realizing it if you don’t keep your delivery costs under control. Furthermore, logistical factors are constantly shifting, so knowing the optimum shipping option for you is more relevant than before.
When you think you’ve located a good supplier, you’ll want to find out how much shipping will cost and how quickly shipments to your target countries typically take.
Manufacturers should be able to provide evidence to back up their promises about delivery times. You can do so by requesting tracking numbers on completed orders. This is a common request, so don’t be hesitant to ask.
Do you have a need for branding?
Most suppliers may offer branded items and packaging as an add-on service when placing an order with a MOQ.
If they do provide branded products, they will almost certainly charge a one-time fee to cover the expenses of the necessary equipment.
Your product will most probably be sent in a plain box if you don’t brand it. Your supplier, on the other hand, will offer many package solutions with your brand logo printed on them when it comes to branding.
This will be slightly more expensive than the simple box packaging, and you must expect to commit to a MOQ for this too, as they will most likely have to go beyond their company for this order.
When it comes to providing things for your online store, manufacturers and suppliers must make a profit. They will if there is a minimum order quantity. You may not always be prepared to reach this quantity, though.
We’ve looked at some of the strategies you might negotiate with your chosen supplier.
Negotiations aren’t always fruitful. As a result, you’ll have to move on and attempt working with other suppliers. You can also manage your store as a dropshipping operation.
Moreover, every dropshipping business owner should be aware of the minimum order quantity (MOQ).