Wholesale Suppliers and Minimum Order Quantities By James S. Walsh At Isnare.com Ezine Articles

If you deal with wholesalers on a regular basis, you've no doubt encountered the minimum order quantity (MOQ), or minimum order size. Though this will vary from wholesaler to wholesaler, and business to business, it is pretty much a constant amongst suppliers. As a wholesaler, I've found the approach different suppliers take to minimum order sizes to range from one extreme to the other, while the reaction of retail buyers to minimum order sizes is rarely rational, and at times, is down right irrational.

There are three main reasons a wholesaler will impose a minimum order size. The first, and most well understood, is to deter retail buyers. If the average man on the street could buy a watch or a silver ring at a quarter of the price that it sells for in a high street shop, then those same high street shops would be unable to compete. As retailers are the target market of almost all wholesale companies, anything that impacts negatively on their sales or on their perception of the wholesaler is to be avoided. Forcing a buyer to purchase five of each item, or insisting on a minimum spend of $500 is usually sufficient to deter retail customers.

The second reason for minimum order sizes is to deter 'amateur' buyers. By amateur, I'm referring to a segment of the retail community that could best be described as struggling. Buyers who fit this category might be eBay sellers who sell ten or so items a week, and market traders who have a little jewellery corner on their stall alongside second hand books and knock off perfumes. Though these buyers are retailers by definition, their operation is on such a small scale that they are unlikely ever to purchase large enough quantities to make their business worthwhile. It's a constant throughout the wholesale world that the smaller the retail customer's operation, the larger and more important they feel they are. The general opinion amongst wholesalers is that a small bi-monthly spend of $50-$60 is not sufficient for the half dozen weekly support calls that would result. For these sorts of customers, a minimum spend of only $200 is usually large enough to make them go elsewhere.

The final reason that many wholesalers find minimum order sizes useful is that in terms of organization - picking and packing the order, dispatch, delivery, invoices and any follow up queries - large orders are simply more economical. A single large order from a shop for $2000 worth of stock, with five to ten of each item being ordered would not take up much more time and effort than a similar smaller order of $200. However, ten smaller orders of $200 each, though bringing in the same income, would involve considerably more time and effort to prepare, ship, and manage.

Minimum order sizes will vary considerably from wholesaler to wholesaler, and product to product. For example, a supplier of expensive gold jewellery would have a very different approach to order sizes than a similar supplier of cheap costume jewellery. One wholesale jewellery company I've been involved with for some time has a minimum order size of only $100. On the surface, this seems incredibly low, but it still proves large enough that retail customers never think to place an order, and emails from potential customers complaining about the high minimum requirement are quite common, meaning the minimum order size works in keeping away undesirable customers.

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