If you’re planning to run a small business selling items online—or if you’re planning on buying in bulk—then you should know what an MOQ is. Here’s what this term means and why it matters.
Minimum Order Quantity
MOQ stands for “minimum order quantity.” In online buy-and-sell transactions, sellers use MOQ to impose a minimum number of units that a buyer needs to make a purchase. If the buyer cannot meet the MOQ, then the seller can decline the order. Sellers might also use this to specify the minimum quantity needed to get a special bulk price. An “MOQ” can refer to a number of units, weight, or volume.
There are a few reasons why a seller might have an MOQ. The most common is that they’re a wholesaler or manufacturer purely engaged in selling to those who need the items in bulk, such as resellers or small businesses. This means that they need to hit a certain number of units to justify the cost of picking, packing, and shipping the order, on top of any discounts for bulk pricing. They will often turn away those looking for volumes that are too low.
Alternatively, MOQs might apply to smaller sellers who create everything on-demand. For example, if someone’s business is making cupcakes on-demand, then the amount of labor, materials, and electricity they’ll spend on will not justify the profit on a single cupcake. Therefore, they might impose a minimum of a dozen or two dozen cupcakes for a single order.
The Origin of MOQ
The idea of a minimum order quantity has existed for as long as industrial manufacturing. Factories frequently imposed minimums on the number of units needed before they could start producing, mainly because the cost of overheads and machines required that they maximize the production day to recoup their costs. This led them to add an “MOQ,” whether implicitly through negotiation or print advertising.
MOQs have also been around on the internet for a long time but became commonplace during the boom of online reselling in the late 2000s and early 2010s. Around this time, platforms like eBay started to take off, along with the practice of local reselling. The first entry for MOQ on Urban Dictionary is from 2008 and reads, “Minimum order quantity for buying items in bulk or for a reduced price.”
Bulk Pricing and Resellers
The biggest reason wholesalers and manufacturers will do this is to maintain “economies of scale.” This refers to firms’ cost advantage when they produce more of something. The more you create a product, the less it costs to produce more. Some costs do not necessarily scale with the amount you’re making. For example, if your oven can fit 24 cookies at a time, making 6 and 24 cookies costs about the same electricity.
This means it’s very advantageous for you to buy things in bulk. The rise of wholesalers on the internet has also led to increased resellers and small businesses that take advantage of these prices. It’s very common to buy an item in bulk online, then resell it to your local network or community for a markup. If you’re making products, you can also take advantage of the reduced cost of materials.
Justifying the Price
If you run a small business, you might also want to impose an MOQ on your products for a few reasons. First, you might need to hit a certain minimum to create your product. For example, if you design enamel pins and partner with a local printing store, you might need to sell a certain number of pins to print a batch. That might mean you require your customers to order 3 or 4 pins at a time so you can hit your minimum faster.
Another significant consideration is shipping. If you’re going to ship products somewhere far away, it might not be worth the trouble to spend on the delivery costs and postage that come with that. Lastly, you might be running a seasonal business, such as Christmas scarves or Valentine’s candy. It might not be financially worthwhile for you to accommodate one-off orders since you’re limited in the number of orders you can take on.
How to Use MOQ
If you’re a wholesaler or entrepreneur who wants to impose a minimum order quantity, add “MOQ” followed by the number of units in your product listing. If you’re a buyer, make sure to check any listings for MOQs before inquiring.
Here are a few examples of MOQ in action:
- “Sublimation t-shirt printing services, MOQ: 100 prints.”
- “MOQ: 30 units, with additional discounts for orders of 60 units or more.”
- “Do you have an MOQ on these handwoven gift baskets?”
Good luck, and happy shopping!
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