HOW TO REDUCE MINIMUM ORDER QUANTITY

Lots of small business and new business always come across the same problem when sourcing products from China, How to reduce minimum order quantity(MQQ). What is minimum order quantity (MQQ)? and how to reduce your minimum order quantity ?

WHAT IS MINIMUM ORDER QUANTITY (MQQ)?
A minimum order quantity is the lowest number of units of an item that a supplier or factory is willing to produce in an order.

WHY CHINESE MANUFACTURERS REQUIRE MINIMUM ORDER QUANTITY?
Chinese manufacturers don’t keep product in stock. While it is easy for factories produce ready-made units which will largely sell in the Chinese domestic market, such as TAOBAO, JINGDONG. As such products are, for obvious reasons, not manufactured in compliance with overseas markets, for example : product labeling requirements and safety standards.
The other reason is Chinese manufacturers tend to operate with low-profit margins which may as low as 3%to 4%, according to market research.

STRATEGIES TO LOWER THE MINIUM ORDER QUANTITY:

• Communication is the key

First find out suppliers the minimum order quantity requirement. Negotiate lower minimum order requirement directly with the suppliers. It is often hard because of the language barrier. By finding a translator or a native speaker with bit of the business background and understanding of the Chinese market as well as the Chinese culture background. He or she will help build the trust relationship between the supplier and overseas buyer throughout the negotiation, also guide overseas buyer finding the best solution throughout the whole purchasing process.

• Use standard component

While many of small business when starting new projects intend to use own labels or design. suppliers will need to set up a new production line to manufacture the customers’ requirements, therefore the cost of moulding /sampling will increase, and minimum order quantity will rise to cover the suppliers original cost. Example : multiple colours labels, each colour will be calculated individually to produce the sample .

There are ways to solve the problem by using generic products to start with.  By purchasing the generic or ready- made products in china your purchasing price will in line with the Chinese domestic market purchasing price which makes the costs of goods at least 30%-80% cheaper than the Australian market. Once the Goods arrive in Australia there are repack companies, such as:ecochoicerepack.com.au. Can add your preferred label or repack the products meet Australian product requirements. Things can be easily done in your own HOME.

• Paying higher purchasing price to begin with in return a lower minimum order quantity.

This option may not be viable for all buyers especially small business. However, paying higher upfront costs in return for getting lower minimum order quantity could potentially lower your logistic costs and storage cost at the same time.

• Using small manufacturers

Larger and well-known Chinese manufactories usually have a fixed minim ordering quantity which is hard to negotiate. But you could find smaller suppliers through sourcing companies who already have a large supplier base across most industries. Smaller manufacturers more likely to be more flexible with the first ordering quantity and offer a more competitive price, because they seeking opportunities to open up their overseas market as well. Using a sourcing agent approved smaller supplier will add more security to your product quality and save you more troubles in importing products to Australia.

• Get products through sourcing company

A sourcing company may have an existing customer with same or similar product you want to purchase. A sourcing agent could negotiate a better price and lower ordering quantity by combining the orders together. Even during shipping, A sourcing agent will provide the most cost-effective shipping method, such as combined shipping. By using a professional buying agent who has an established Chinese supplier base, you will add on more barging power over initial ordering quantity and final purchasing price. Contact us.

In summary, buying from China will not be so hard when you using a professional sourcing agent, we will provide a professional business guideline throughout your whole buying process. From lowering ordering quantity, sampling, negotiate price, finalise orders to logistic and warehousing options. Contact us.