Buying a smaller MOQ (Minimum Order Quantity) from Chinese suppliers at a good price is a “chore” not only for new smaller businesses but for large well-established companies as well. Usually, firms might want to purchase small quantities for three reasons:
- Trial order, because you want to make sure quality is up to their standard before placing a repeat order for larger amount;
- Not enough capital. When you are a newcomer to the industry or you are selling smaller quantities on Amazon, Ebay or even your own site;
- You want to have a test run for your new product to make sure market responds to it and you are actually selling.
You see, lower MOQ is a very important part of the business. But, as we know, these are many challenges you must face when attempting to negotiate lower prices for it. Then do you have to pay more for a smaller MOQ? Of course not! Here I’ll share seven practices you can use immediately on your sourcing.
Let’s get started!
1. Select the right product
Even before you start searching for suppliers, you first need to take a closer look at your product and research how much demand and supply does it have in your target market. What are the prices and variations of this particular product?
The more unique your product is, the less likely you will be able to get a lower price for a lower MOQ. “Uniqueness” would include a completely new product, unstandardized parts and materials, logo printing, customised packaging. To have the MOQ decreased as well as to make sure the price does not skyrocket, you will have to consider sticking with a standard product, meaning you buy what the supplier offers you without making any substantial changes.
2. Send inquiries to both trading companies & manufacturers
Trading companies in China act as middlemen between the manufacturers and clients. It’s not necessary to hate these middlemen. They’re here because the market needs their value. And if you find the right trading company to assist you, your price, as well as your MOQ, can be negotiated. Let me explain.
Trading organisations are able to combine several smaller orders from different clients (for the same standardised product) and place a larger one to the manufacturer, which will bring you to your goal of a smaller quantity at a better price. Additionally, trading companies on a lot of occasions carry small stock quantities for niche products where you as a customer can purchase starting from 5-10 pcs and at a decent price. And trading companies have more choice to place a small order at a good price because they steady purchase kinds of products from the manufacturer for years.
Manufacturers, on the other hand, are not very practical if you want really smaller MOQ (under their minimum) and a low price at the same time. They have a preference for higher quantities even if it is not OEM. But do not despair; try to find smaller factories that will have lower negotiation power which is advantageous to you.
3. Contact more suppliers
The more the merrier is a great answer here. But we all have a limited amount of time, so the perfect number would be to have 5-6 suppliers (a mix of manufacturers and trading companies) to choose from in the end, which means you might need to contact 10-15 of them to get the correct quotations.
You need more than one to simply prove the lowest purchasing price you can get and your room for negotiations. Add to that, you can analyse the information regarding MOQ.
4. Make communication, checklists & negotiations
Even you are the owner of your business, the suggestion here is to not admit it to the suppliers but introduce yourself as a purchasing manager or specialist. This gives you more leverage for negotiations. You will always be able to say that the final decision is not in your hands.
For example, you are pushing for a smaller quantity order but want the price to remain the same as their MOQ. You can try and bond with your supplier saying that you understand how hard for them it must be to achieve, but your boss is very insistent, and there is nothing you can do about it. You ask them for help just this time. And it most often works.
When sending an inquiry to the potential suppliers, here is the checklist you can use:
- Product variations available
- Prices for 3 different quantities (e.g.,. 100/500/1000)
- Payment options
- Lead time
- Shipping methods
- Sample availability
- Sample price
After you receive all the relevant information, negotiations can start. And yes you should choose more than one supplier to bargain with. Do not be afraid to negotiate, be realistic about it. If you originally requested a price for 10,000 pcs for product X and it was USD 1.00, then you cannot expect the price to be the same for a quantity of 100 pcs. Both $1.05 and $1.10 are good results here in my opinion.
Note: You need to make sure to start your negotiations only after you have received a sample. Looking at the product on your computer screen and holding it in your hands can change everything and yet again gives you leverage for negotiations. Nothing is perfect, so use it.
5. Expand your search and get better quotations
The first source for Chinese product information should be alibaba.com. But that is not the only one, especially if your target MOQ is quite small. Make sure to browse through Alibaba’s subsidiaries such as aliexpress.com (which is great for purchasing smaller quantities at a decently low price).
I also challenge you to use Google Chrome translation functions and venture out onto the Chinese language platforms like taobao.com and 1688.com where everything is sold in RMB (Chinese currency), and you can communicate with wholesale suppliers directly through a chat function and discuss quantities and price you are looking for.
Further, you can find more suppliers on these sites which are similar to the above sites:
6. Attend tradeshows and exhibits in China
There are offline ways to keep a low price with small MOQ, and face-to-face negotiations usually give buyers an edge. You can win a lot more trust that way than over the Skype talks.
There are numerous trade shows, fairs and exhibitions taking place in China every day. My suggestions would be to look into Canton Fair that takes place twice a year. Also, Yiwu International Trade Market that runs every day (except Chinese National holidays) and has over 80,000 suppliers. Coming to China might not be the cheapest thing to do, but it will bring advantages. You can go to the factories, directly negotiate, save a lot of time and money on samples. You will also establish a personal connection with your suppliers, which will help you get more wiggle room in your price-quantity discussions.
Another great way would be to find yourself a sourcing agency in China that will negotiate everything for you, and if you wish so will have the goods delivered to your door. They do have a fee, but they also have more guanxi (social system of relationships that facilitates business dealings), which in China can get you a long way. These firms can try and negotiate lower MOQ’s for you without having the price being raised.
7. Inquire about excess stock
One more option available to you if you are trying to save money is to purchase excess stock (both factories and trading companies can be in possession of it). This, on the other hand, means that it might not be the exact product you want. There is also a strong possibility that it is a private label product.
Firms come in, place an order, and sometimes they just cancel it after everything has been produced and is ready to be shipped. Factories try to get rid of this excess stock by finding direct clients and by dealings with trading/sourcing companies. In this situation, potential clients have a lot of power. The factory needs to at least break-even so that you can get very small product quantities for extremely low price.
As discussed above there are numerous ways to get lower MOQ at a good price. Different options work for different products and suppliers. One thing that needs to be remembered is that lower MOQ at a lower price can sometimes result in inferior quality. For that not to happen to make sure you communicate with your suppliers on a constant basis and monitor the process from start to finish by asking for progress pictures and samples.
I hope this information can be valuable and useful to you. I would love to spread the word as much as possible, so a lot more people can succeed in running their own business whether you are a small company or a large organisation. Please share your thoughts and comments, and of course, it will be great if you can share this post with your friends and colleagues!
Thank you and we hope your day will be great!