When it comes to doing business, there are countless words and terms you need to know. This makes it easier for everyone, both buyer and seller, to interact with each other. It also saves a lot of time for both parties involved – but only if you know the terminology already.
One of the most important terms for retailers and wholesalers is Minimum Order Quantity (also known as MOQ). Simply put, MOQ establishes the bare minimum of units you have to buy to be eligible to make a purchase. There’s more to it than that, though!
In this article, we’ll explain what MOQ is, why it’s important, and how to use it when you’re buying something. If you’re dealing with wholesalers, you definitely need to know what MOQ means. Read down below to find out!
What is MOQ?
MOQ stands for Minimum Order Quantity. As the name suggests, it’s the minimum amount of units you have to pick to make a purchase. Most wholesalers have MOQ requirements for anyone who wants to buy something from them.
For example, let’s say you want to buy lipstick from a wholesaler. More likely than not, you won’t be able to buy one unit of lipstick from them – that’s what retail stores are for! This wholesaler will only sell you their lipstick products if you buy at least 100 units. That number, 100 units, would be their MOQ for lipstick.
Is the MOQ always the same?
How big or small the MOQ is depends on the wholesaler himself. There’re no rules or laws against having a different MOQ from other businesses.
You’ll soon find out that one wholesaler can have a different MOQ for different products too. For example, a company can have an MOQ of 100 units for lipsticks and an MOQ of 50 for cleansers.
As a general rule of thumb, the bigger the wholesaler, the bigger their MOQ will be. When a company wants to help retailers, they try to set their MOQ as low as they can.
Why do wholesalers set a MOQ requirement for their products?
Well, there’s a simple reason for it: profitability. Most wholesale businesses make money when they sell a certain amount of units per sale.
If they decide to act as a retailer and sell their products no matter the amount, they’ll soon go bankrupt. Logistics and transportation alone are rather costly for wholesalers, that’s why they need to put an MOQ requirement.
Do not confuse MOQ with MOA!
Sometimes people get MOQ mixed with MOA. They are similar – but they are far from equal. MOQ is Minimum Order Quantity and MOA is Minimum Order Amount. MOQ is for units of products and MOA is for money.
For example, a wholesaler can have an MOQ of 100 units and an MOA of $1500. You have to meet both requirements before making a purchase.
Let’s say you need to meet an MOQ of 100 lipsticks before buying from a wholesaler. You put that in your cart and notice your purchase is worth $1400 – you still need to add something worth $100 to make a purchase, because you’re $100 behind the MOA.
Why should I know what MOQ is?
Understanding how MOQ works is fundamental to run a retail store. Not knowing why MOQ exists or how it affects your business could be the difference between making money and going bankrupt – it’s that important!
A high MOQ means a lower price per unit
When you’re buying wholesale, you’re buying in bulk. This reduces shipping costs and could land you a great deal. Buying one unit alone will make you pay full price, buying 100 units could get you a 10% discount. That’s the beauty of buying wholesale.
But wait! Does this mean you should always buy as many units as you can? Not necessarily. And, sometimes, a high MOQ should make you think about whether you want to make a purchase or pass on a discount.
A high MOQ could also mean you’ll overextend yourself
Here’s an example: let’s say you need to buy 50 facial masks to re-stock your store. You talk to a wholesaler and he says the MOQ is 100 units.
Even though you’ll get a better price per face mask, should you buy twice as many? If you’re able to afford it, you should go right ahead. On the other hand, if you’re running tight on money, you may face cash flow issues.
50 units may not seem like that much, but what if you need 100 face masks and the MOQ is 500? That’s an entirely different story.
MOQ will determine how you’ll run your business
Working with the right wholesaler is the key to have a healthy business. You need to have a wide variety of options to be able to run your business however you like.
If you work with the wrong wholesaler, you could end up buying more than what you need every time – and only because their MOQ is high!
A high MOQ benefits the wholesaler. And it may allow you to get better prices. You should think how much a high MOQ benefits you, though. From the retailer’s point of view, a low MOQ is, more often than not, the better thing.
Is having a low MOQ always a good thing?
Nine times out of ten, a low MOQ is beneficial for you. Does this mean you should always look for wholesalers with a low MOQ requirement? Not necessarily!
The key to finding the right MOQ for you is to try to strike a balance. You should always look for the highest MOQ possible within your price range. Remember, the more units you buy, the better price you’ll get.
Don’t let a 10% discount throw you off balance, though! Sometimes, less is more. If you have to go out of your way and buy as twice units as you need for a discount, that MOQ could be a little too high – and that discount may cost you more than what you’re saving.
Then again, the fewer units you buy, the closer you will be to paying full price. If you are running a retail store, you need better margins than that. Buying a little more than what you need could benefit you in the long run – as long as you can afford to do so!
The good thing about dealing with wholesalers is that you can talk numbers with them. If you find a wholesaler with a low MOQ, you can work your way into bigger discounts when you’re ready to buy more units at a time. You start slow and pick up the pace whenever you feel like you’re ready.
Simply put, the best MOQ possible is the one you can afford. That’s probably a low MOQ. You should always look to work with an Asian beauty wholesale supplier who understands your position as a seller and tries to help you as much as they can.
In business, the key to success is partnering with the right people at the right time.
Work with UMMA
Do you want to partner with a company that has the best K-beauty products, competitive pricing, and a low MOQ?
UMMA is looking for entrepreneurs and retailers who want to, or already sell K-beauty products. K-beauty is one of the biggest markets there is – and one that’s expanding every day!
UMMA is an all cosmetics wholesale website offering 100+best, local, and exclusive Korean brands.
As you know, a low MOQ is perfect for retailers, but it comes at a price: the MOA is most likely higher in order to obtain as much revenue . Well, not this time! We wants to help all parties, both brands and business owner members succeed. Because of that, they offer a low MOQ and they also have competitive prices.
How does UMMA manage to get the best prices and have a low MOQ?
It’s rather simple: they cut the middlemen and deal with you directly! They have a one-on-one relationship with their partners, which allows and this includes the way they deliver their products.
Not only that, but they also pool their many customers together when they make a sale. Whenever you’re buying something from UMMA, you’re joining other entrepreneurs like yourself to buy something. That ensures you get an even better price than the one you’d get anywhere else by yourself!
UMMA provides you with more than competitive pricing
This company is at the heart and center of the K-beauty world. Their headquarters are right Seoul, Korea! From best brands to cult favorite, even locally trending brands, you can find a wide but relevant variety of wholesale makeup, haircare, and facial products.
UMMA gets the latest trends, news, and products before anyone else in the world! If you partner with them, so will you.
Alongside competitive pricing, they offer great marketing strategies and everything else you need to increase your profits and expand your business.
That’s the edge you need to become better than the competition.
When you partner with UMMA, you get the best of both worlds, a low MOQ and competitive pricing. It doesn’t get any better than that!
Sign up today and get a registration bonus you can use on your first purchase.
