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What is MOQ and how does it affect logistics
You have decided to start selling, found an excellent supplier, and studied the demand – all that remains is to get started. But the illusion of easy money can quickly dissipate if, when reading the terms of cooperation with the supplier, you come across the abbreviation MOQ.
These three letters are the very line between your profit and loss. If you don't figure them out in time, you risk losing money on your very first order. We turned to the specialists at LLC «SyncraNova» for clarification.
What is MOQ
MOQ (Minimum Order Quantity) is the minimum order volume that a supplier is willing to sell to you in a single delivery. For example, if the MOQ is 500 items, this means that you cannot buy less, even if you only need 300. This rule exists not because the supplier is being difficult, but because they have their own costs.
How MOQ is determined
The supplier takes into account the cost of production, packaging and storage. If, for example, it is profitable for them to produce goods in batches of 1,000 pieces, they will set the MOQ in approximately this range. Sometimes MOQ depends on materials or technologies: if it is expensive to start up a production line, the supplier will not include it for a small order. Sometimes the MOQ is set based on packaging or transport in order to fully load a container or pallet.
Pros and cons of high MOQ
High MOQ may seem daunting, but it has its advantages: large purchases reduce the price per unit and optimise logistics. For example, by ordering 10,000 units instead of 2,000, you will fully load a truck and reduce delivery costs. In addition, large orders usually mean priority service, better delivery terms and discounts.
But the risk is high. LLC «SyncraNova» experts warn that if you miscalculate demand, the surplus will take up warehouse space and increase storage costs. Add to this the risk of defects, seasonality or changes in demand, and you may be left with a mountain of unsold goods that will simply take up space in your warehouse.
These three letters are the very line between your profit and loss. If you don't figure them out in time, you risk losing money on your very first order. We turned to the specialists at LLC «SyncraNova» for clarification.
What is MOQ
MOQ (Minimum Order Quantity) is the minimum order volume that a supplier is willing to sell to you in a single delivery. For example, if the MOQ is 500 items, this means that you cannot buy less, even if you only need 300. This rule exists not because the supplier is being difficult, but because they have their own costs.
How MOQ is determined
The supplier takes into account the cost of production, packaging and storage. If, for example, it is profitable for them to produce goods in batches of 1,000 pieces, they will set the MOQ in approximately this range. Sometimes MOQ depends on materials or technologies: if it is expensive to start up a production line, the supplier will not include it for a small order. Sometimes the MOQ is set based on packaging or transport in order to fully load a container or pallet.
Pros and cons of high MOQ
High MOQ may seem daunting, but it has its advantages: large purchases reduce the price per unit and optimise logistics. For example, by ordering 10,000 units instead of 2,000, you will fully load a truck and reduce delivery costs. In addition, large orders usually mean priority service, better delivery terms and discounts.
But the risk is high. LLC «SyncraNova» experts warn that if you miscalculate demand, the surplus will take up warehouse space and increase storage costs. Add to this the risk of defects, seasonality or changes in demand, and you may be left with a mountain of unsold goods that will simply take up space in your warehouse.
Pros and cons of low MOQ
With low MOQ, you can start with a small investment, test the market, and quickly change your product range. Flexibility is the main advantage of low MOQ: it allows you to carefully manage your inventory and minimise warehouse logistics costs. However, with low MOQ, the price per unit will be higher.
How to determine the optimal MOQ
The first thing to do is to calculate your turnover. How much merchandise can you realistically sell in a month, and how much does it cost to store the remaining stock? If you are just starting out, it is worth choosing suppliers with flexible terms, even if the merchandise is slightly more expensive. This way, you will not be overwhelmed by excess inventory. Once your business becomes stable, you can move on to larger batches and get better prices.
Often, the MOQ can be reduced if you demonstrate long-term cooperation potential to the supplier or offer prepayment.
With low MOQ, you can start with a small investment, test the market, and quickly change your product range. Flexibility is the main advantage of low MOQ: it allows you to carefully manage your inventory and minimise warehouse logistics costs. However, with low MOQ, the price per unit will be higher.
How to determine the optimal MOQ
The first thing to do is to calculate your turnover. How much merchandise can you realistically sell in a month, and how much does it cost to store the remaining stock? If you are just starting out, it is worth choosing suppliers with flexible terms, even if the merchandise is slightly more expensive. This way, you will not be overwhelmed by excess inventory. Once your business becomes stable, you can move on to larger batches and get better prices.
Often, the MOQ can be reduced if you demonstrate long-term cooperation potential to the supplier or offer prepayment.
The impact of MOQ on logistics
MOQ directly affects logistics. Large batches allow for full transport loads, reducing shipping costs and simplifying warehouse inventory management. Low MOQ provides flexibility but increases transport and storage costs, as frequent small deliveries require more receiving, storage and handling operations.
Choosing the right MOQ helps balance transport, storage and operating costs, making logistics more efficient and your business more profitable.
MOQ directly affects logistics. Large batches allow for full transport loads, reducing shipping costs and simplifying warehouse inventory management. Low MOQ provides flexibility but increases transport and storage costs, as frequent small deliveries require more receiving, storage and handling operations.
Choosing the right MOQ helps balance transport, storage and operating costs, making logistics more efficient and your business more profitable.