The Short Guide to Minimum Order Quantities (MOQ)

"The challenge of MOQs forces innovation in inventory management and supply chain efficiency." - Jeff Bezos

A Minimum Order Quantity (MOQ) represents the smallest number of units a manufacturer will produce for an order. For example, if a t-shirt manufacturer sets an MOQ of 500 pieces, you must order at least 500 shirts before they'll begin production, even if you only need 300.

Key MOQ Concepts

• Multiple MOQ Types: Suppliers often have different MOQ requirements for:

  
  

  • Overall orders (Example: Minimum $5,000 total order value)

  • Individual products (Example: 500 units per style of shirt)

  • Materials (Example: Minimum 1,000 yards of fabric)

  • Colors and customizations (Example: 200 pieces per color variant)

• Supply Chain Impact: MOQs cascade through the supply chain. For instance, if a zipper supplier requires a minimum of 5,000 pieces, a jacket manufacturer might need to set their MOQ at 1,000 jackets to efficiently distribute these component costs.

• Profit Margins: With typical margins of 3-4%, manufacturers require high volumes to maintain profitability. For example, on a $10 product with 4% margin, the profit is only $0.40 per unit - meaning they need volume to cover operational costs.

Industry Standards with Real Examples

Common MOQ requirements vary by industry, for instance:

• Clothing:

  
  

  • 500-1000 pieces per order (Example: A basic t-shirt line)

  • 100-300 pieces for standard colors (Example: Black, white, navy basics)

  • 100-250 pieces per size (Example: Small, Medium, Large)

• Textile Fabrics

  • 3000 meters (custom colors)

  • 500 – 1000 meters per color (standard color)

• Electronics: 500-1000 pieces per order (Example: A smartphone accessory manufacturer requiring 500 units minimum for a custom phone case design)

  
  
  
  

Strategic Approaches with Practical Examples

1. Present your own MOQ bid with total order volume instead of negotiating theoretical quantities. Example: "We want to order 300 blue shirts and 200 black shirts, totaling 500 pieces."

   
   

2. Consider using standard materials and colors for lower MOQs. Example: Choosing black polyester fabric (readily available) instead of custom-dyed organic cotton (high MOQ requirements)

   
   

3. Limit product customization to avoid triggering higher MOQ requirements. Example: Using standard zipper sizes and existing button colors rather than custom hardware

   
   

Note:

While low MOQs may seem attractive, extremely low quantities (10-20 pieces) often indicate trading companies rather than manufacturers. For example, a factory offering to produce just 20 custom watches might be reselling lower-quality products rather than manufacturing them, potentially compromising product quality and compliance standards.

For more on this topic, read Decoding Factory Policies: The MOQ Explained