MOQ (Minimum Order Quantity) is the minimum number of units a manufacturer or supplier requires per purchase order. If a factory's MOQ is 500 units, they will not accept an order for 200 units.
Why suppliers set MOQs: Producing small quantities is inefficient. Machine setup, material procurement, and quality control have fixed costs. MOQ ensures the supplier covers those fixed costs and makes the order economically viable.
MOQ in Ecommerce Context
For FBA and ecommerce sellers, MOQ affects:
| Decision | How MOQ Factors In |
|---|---|
| New product launch | High MOQ means high upfront risk before demand is proven |
| SKU expansion | Low-demand variants may be hard to source if MOQ exceeds realistic sell-through |
| Cash flow | First order ties up capital equal to MOQ × unit cost |
| FBA storage | Sending MOQ units to the FC immediately can trigger storage fees if they don't sell |
Negotiating MOQ Down
MOQ is rarely fixed. Tactics to negotiate lower:
- Pay a higher unit price — suppliers often lower MOQ if you accept a lower margin per unit
- Accept longer lead time — allows the factory to batch your order with others
- Order samples first — establish the relationship before asking for volume discounts
- Consolidate SKUs — order multiple variants in one PO to hit the factory's minimum revenue target
MOQ vs. Reorder Point
MOQ is a supplier constraint; reorder point (ROP) is your internal inventory signal. When stock drops to the ROP, you trigger a new PO. The quantity you order in that PO should be at least the MOQ.
Example: MOQ = 300 units. ROP = when you have 6 weeks of stock remaining. Lead time = 4 weeks. You order 300 units when 6 weeks of stock remain so the new inventory arrives before you run out.