What is MOQ and why do Chinese suppliers require it

When we are about to buy wholesale goods from China, one of the biggest problems, especially for SMEs, is that of the minimum order quantity (MOQ) required by factories, which is often very high.

All Chinese suppliers are, in fact, very strict on compliance with the MOQ and below the established threshold no supplier is willing to make the goods because, in terms of costs and revenues, it would not be convenient: therefore if you cannot comply with the minimum order quantity given by the supplier, your order risks not being taken care of as there are no negotiation margins.

Why Chinese suppliers require a MOQ

Chinese suppliers, and in general all suppliers that resort to low-cost labor, have a tendency to require fairly high minimum order quantities: this is because the profit margin is fairly small, typically hovering around 2-4%. The Chinese market is very competitive, companies aim to keep prices as low as possible, the consequence is that to have a profit margin they must produce large quantities of goods.

Another thing to consider is that most Chinese suppliers have constraints that do not allow them to choose whether to lower the MOQ or not: with a lower minimum order they could do more business as well as working with small importers, but they themselves are subject to constraints that make this operation impossible.

When purchasing raw materials and components useful for production, manufacturing companies must in turn comply with the minimum order quantities imposed by suppliers. Consequently, in order to avoid having warehouses full of raw materials and unused components, they must in turn impose minimum quantities on the purchaser. The Chinese in fact do not have an inventory of products in ready delivery, they buy materials and components necessary for production only after the order with the importer has been successful: in this way they reduce the costs of managing the warehouse and also the risk of being at home of unsold products.

It should also be noted that goods destined for the European and US markets require special certifications that require the use of high quality materials and components, and this obviously has a cost. Also for this reason, Chinese suppliers prefer to wait to conclude an order rather than take the risk of starting a very expensive production without already having a buyer.

What is the MOQ of Alibaba and AliExpress companies

The MOQ on Alibaba

If you think that Alibaba does not follow this principle, you are mistaken, in fact, the Chinese giant is simply a marketplace that gathers Chinese suppliers, but that does not intervene in any way in the management of the production process of the goods.

The MOQ on Alibaba therefore varies from supplier to supplier, but is generally quite high: this is because, as mentioned before, the companies on Alibaba follow the same principles listed above and consequently do not sell ready goods, but only make them after the order and after purchasing materials and components in turn.

For a wristwatch, for example, a purchase of at least 300 pieces is generally required. The MOQ request must always be related to specific products: this means that if you order two different types of items, the minimum order quantity is double because you have to consider that they are two different products and each of them has its own MOQ, even if the supplier is the same.

The MOQ on AliExpress

On AliExpress, however, the minimum order quantity is quite low, because being a B2C platform it has retail prices and not wholesale prices.

On AliExpress you can only find finished products and buy them as they appear, it is not possible to produce customised goods, nor customise them with the application of logos or images. What is proposed by this platform are simply products ready for delivery.

Here, you can buy both individual pieces and in small quantities, but it is good to know that being a B2C platform the wholesalers present are intermediaries who have purchased from manufacturing companies to resell to third parties consequently the prices are not those of the wholesale goods and therefore are not very advantageous.

This is why, on AliExpress unlike Alibaba, you can find fixed unit prices. The prices shown are consumer prices. A real wholesaler will never be able to provide you with the unit price of the goods, because this varies according to the quality standards required, the materials used and above all the quantity of goods ordered and the delivery times. As a result, the price of this wristwatch can vary greatly, from 2 euros to more than 200 and this depends on the quality standards required and the delivery terms.

How to buy merchandise from China without MOQ

The minimum order quantity cannot be negotiated: reducing it is difficult, eliminating it altogether is impossible because it would mean asking the supplier to work at a loss and no one is willing to do this. A reduction in the minimum quantity to be ordered is possible if:

different product orders for which the same materials and components can be used;
you manage to coordinate your purchase with that of other importers;
imports products that do not need certification standards, in this case you can choose items designed for the Chinese market.

If you want to buy directly from China without the minimum order quantity, you can contact Yakkyofy, the only platform that helps you in sourcing from China. With Yakkyofy you can order individual pieces, without the obligation of the MOQ if you decide to sell in dropshipping, or you can order wholesale goods with very low quantities.

Obviously you must also consider that the purchase of the single price in dropshipping is linked to the presence of a pre-existing stock while as regards the wholesale plus the MOQ salt, the lower the price of the single product because it amortizes the basic production costs.

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