MOQ on Alibaba: Definition and Explanation
MOQ definition
MOQ or Minimum Order Quantity is basically the minimum amount of inventory that Alibaba suppliers require to make your order. In the sourcing and manufacturing industry, it is the typical measurement for the number of orders that can help suppliers to generate profit. MOQ is also related to the economy of scale concept that the more suppliers created, the cheaper the cost of production.
An example to demonstrate how MOQ works is supposed an Alibaba supplier who sells custom printed t-shirts with an MOQ of 100 pieces. To meet the supplier's criteria, the buyer must order a minimum of 100 T-shirts. The supplier may provide a cheaper unit price for larger orders, but in order to engage with this supplier, the buyer must commit to purchasing at least 100 t-shirts. 
The crucial of MOQ
In general, MOQ is an important factor for Alibaba suppliers as it helps them manage their production, inventory, and costs. Setting a MOQ allows suppliers to ensure that they are producing or sourcing products in economically efficient and sustainable volumes for their business. Another benefit of MOQ for suppliers is to control their inventory and reduce the risk of overstocking or under stocking. Reduce the risk of buffer stock and associated costs.
As mentioned above, MOQ is also a measurement that helps suppliers to follow the economy of scale concept. Streamlining their production and logistics processes allows greater efficiency and cost savings.
On the buyer side, MOQs can help to ensure that they are working with serious suppliers who are capable of producing or sourcing products in large quantities. Alibaba's suppliers normally originated from China – which is supplier of the world’s inventory-have a reputation for producing a massive production.
Reasons why some MOQs in Alibaba are so high and why suppliers require MOQs
While the MOQ is essential for Alibaba suppliers, The MOQ is one of the most common issues that individuals encounter when shopping for items and providers on Alibaba, as it is typically very large and unaffordable for newbie purchasers.
The factor affects the high level of MOQ in Alibaba
Large-scale order reference
High MOQ level demand from Alibaba suppliers is a nuisance for small and individual buyers that is above their need for inventory. Eventually, some factories don’t favor small orders and prefer to maximize profits by requiring you to satisfy their high MOQ demand. Alibaba suppliers are from China – which produce goods in massive quantities at affordable prices. So, they tend to ignore or not accept small-scale orders.
Managing cost efficiently
This follows up that suppliers also need large MOQ to make their production or sourcing process economically efficient. For example, a custom-designed supplier will not accept 10 shirt orders when their equipment is mainly used for large-scale production of up to 100–300 units.
High-end or specialized product
Additionally, some product sectors like high-end or specialized will require high MOQ to cover these production costs and make a profit, the production cost may be higher due to the specialized nature of the product.
How MOQ is demanded by suppliers on Alibaba
Determine the demand
This will be dependent on buyers, Alibaba suppliers must forecast the demand including different factors like merchandise type, contests, seasonal influence, and numerous other elements.
Calculate the Break-Even Point
The break-even point is a business concept that refers to the total cost of producing equal to the total revenue generated from its sales. In the other word, it means there is no profit or loss. The break-even point can be determined by fixed costs and variable costs associated with producing and selling the product or service.
Understanding the holding cost
Holding cost is one major cost that drastically affects profitability. Including costs such as storage and handling cost, insurance, obsolescence, depreciation, and opportunity loss. It is a thing you need to think about before greatly investing in inventory.
Coming up with your MOQ.
Set MOQs for each item and devise a strategy for how you will use it after gathering all the information. If necessary, continue utilizing other incentives and bulk purchasing discounts to increase the Average Order Value (AOV). And choose clients with whom you can easily maintain relationships.
Tip of Negotiation in terms of finding low MOQ Alibaba Suppliers
3 Tips for negotiating for Lower MOQ
Comparison prices
The recommendation is that you should choose 3 or at least 2 suppliers to compare prices. Research and comparing prices are crucial for you to understand how prices contribute to your target products. This will give you a better understanding of the product's fair market value and allow you to negotiate from a position of strength.
Show confidence
Try to impress suppliers that you are a serious client that wants to do business with them. Introducing yourself first and asking common questions about sample availability, price, order lead time, payment and shipping options, etc. This means you try to emphasize the possibility of a long-term partnership, which can bring more business and bigger orders in the future. This can motivate the supplier to be more flexible with the MOQ. Show yourself confidence and strength, and don’t says word like “I don’t have a lot of money” or “I’m not sure if the product is going to sell.” You can also ask them whether they will be able to cover the sample price after the order has been placed. Some suppliers will cover the cost of the sample for you.
Being reasonable in negotiating.
Keep in mind that MOQ is also the measurement for Alibaba suppliers to get profit, so don’t be greedy, keep the MOQ level satisfactory for both you and your suppliers. For example, you can try to lower the MOQ from 1000 units to 700-600 units, not drastically from 1000 units to 100-50 units. Try to offer a higher price per unit if you cannot meet the MOQ.
The case study
For example, you are looking for an MOQ of 300 units from the initial demand MOQ of 1200 from suppliers.
First, you need to negotiate several rounds to get an acceptable MOQ. You can ask them to reduce the MOQ like “Products are for market test and will make larger quantity if goes well” or “setting to establish a long-term relationship.”
If the answer is no, you need to change the way to approach Alibaba suppliers about MOQ. You can introduce yourself to the potential client by; “ "Our brand has a great scale in this business area, if we cooperate this time, your factory will be one of our suppliers for other items". And if the answer is still no, you can ask for higher prices per unit, which will compensate for the loss of MOQ, or say that you have invested a lot in ads, design, and branding to guarantee a big win for products. At this point, factories can reduce their MOQ. However, it can still be higher than your expectations but remember to let the representatives talk to the manager/ boss again and give him a deadline for a 7
What to do if your purchasing power can’t reach Alibaba Supplier MOQ
However, it is possible that Alibaba suppliers still reject your negotiation. There are 2 options you can choose to follow:
2 options if you can’t meet the MOQ of the supplier
Give up suppliers
There are a lot of suppliers in Alibaba selling the same products, you can opt to use alternates suppliers and research to find another suitable supplier for your products, you can choose smaller suppliers rather than major ones, they are more flexible to do small MOQ.
Negotiating for one last time with a narrower gap
Try negotiating for the last time. Do narrow down the gap between the supplier's demand and your expectation level.
- Increase your level of MOQ
This is not optimal that will benefit you, but this will ensure a successful order with Alibaba suppliers you want.
- Limit the customization
Try to reduce the customization of your products. This helps suppliers to cost less in customization fee. For example, use pre-existing model from suppliers.
- Offers higher price per unit
As mentioned above, offering to pay a higher price, say 10-20% higher, may encourage your supplier to accept a small order.
Scenario if your order is lower than MOQ Alibaba supplier
This is one of the scenario examples to deal with Alibaba suppliers.
Background: I have three suppliers and want to compare prices and minimum order quantities. The following is a brief conversation:
Me: Can you make this, and how much will it cost?
Supplier: Yes, we can do that for 5 Yuan per piece. However, if it is a customized product, the minimum order quantity is 3000 pieces.
(With the other two I've researched previously, the MOQ ranges from 3000-4000 pieces, so the real MOQ can be 3000 pcs, while the others range from 5-6 yuan per unit.)
Me: Please give me the best price possible; I'm looking for a long-term supplier.
Suppliers: 4.5 yuan per piece (do not reveal your true expectations to the supplier at first. Alternatively, try to be confident that you understand the products and their prices, quantities, and other details.
Me: The MOQ is too high for us; can you meet 2000 units?
Supplier: No, the minimum order quantity is not high.
(Because I only need 2000 pcs, I don't need 1000 more. So, I try to compensate by hinting at a long-term relationship)
Me: I need 2000 pieces for this first order, but if everything goes well, we'll buy this product more frequently. (Inform the supplier that regular orders will earn them more money.)
Supplier: Okay, but the price will be 5.8 Yuan, according to my boss.
Me: I have 5.3 Yuan to offer; if you accept, we can place an order.
Supplier: I checked with my boss, and 5.3 Yuan is fine.
This is a simple scenario for reference, different suppliers will need different approaches.
Tips to find low MOQ suppliers on Alibaba
Finding low MOQ (Minimum Order Quantity) suppliers on Alibaba can be a bit challenging. Therefore, choosing lower MOQ suppliers can be beneficial. Some tips can help you choose the right supplier, as there is no right MOQ for all suppliers:
Calculate the MOQ: try to understand how the MOQ comes up with negotiating with the fact you know a lot about products.
Use the search bar: Go to the "Ready to Ship Channel" on Alibaba.com/bulk. In the search bar, type the product you're looking for. In the "Minimum Order" column, enter the quantity required. Explore the options and select the product you want to ship from Alibaba. This way you can find a suitable MOQ range for your order.
Another alternative is to create an open RFQ (request for quotation) on the RFQ marketplace and specify the exact quantity you require. In this manner, the supplier knows exactly how much you want from the outset and can decide whether or not to fulfill your order.
