Suppose you are a small start-up clothing brand in the UK and want to customize 50 velvet dresses for testing market. So you send an inquiry to a Chinese garment factory, but the factory told you that the minimum order quantity is 300 pieces. The reason is not only the value of the product itself, but also various operating costs, machine costs, sample costs, labor costs, etc. If the order quantity is lower than the minimum order quantity, the cost will be very high, and the price is beyond your unbearable range. If the price is too low, the factory will lose money. What would you do if it were you?
With the continuous emergence of many start-up clothing brands, many foreign trade companies have noticed a phenomenon that orders have become smaller and scattered in recent years, and even can not reach the minimum order quantity. When foreign trade companies face to this kind of inquiries,they have to struggle for a long time. It is really like chicken ribs. It is tasteless to eat and a pity to discard. Meanwhile, the purchasers are also very distressed. Under the uncertain market sales situation, it seems that low order customization and procurement have become extravagant demands. Today, we will discuss the causes and consequences of low MOQ clothing manufacturing and solutions to bring you more ideas.
What is low MOQ clothing manufacturing?
Let’s first look at what is the minimum order quantity and why the term “minimum order quantity” appears. Order quantity,abbreviated as OQ. The full name of MOQ is the minimum order quantity. The minimum order quantity refers to the minimum quantity of the factory to ensure the cost. This quantity can be produced on the production line, and the cost can be guaranteed to a certain extent. Generally speaking, only when the minimum order quantity is guaranteed can the factory make profits. Otherwise, it is very likely to be busy in vain or even lose money.
Why most factories can’t be a low MOQ clothing manufacturer?
1. Be a low MOQ clothing manufacturer will reduces efficiency and occupies a lot of human and material resources
Generally speaking, factories tend to produce with a single category and large quantities. From the perspective of production, this kind of order is the most efficient and saves time. For conventional clothes, the factory has a mature production line, and the workers are familiar with the steps of clothing production, so there is no need to repeat typesetting and testing. However, for small batch garment production, because of the need for testing, the master makes plates and opens a separate production line, which occupies a lot of human and material resources and reduces the production efficiency.
2. For small batch customization,a low MOQ clothing manufacturer does not make money and may lose money
Small batch garment production requires proofing and testing. During this period, machine costs and labor costs of proofing masters will be incurred. Even if you pay the sample fee, the factory is not profitable. Especially in the process of constantly improving products and correcting small errors, the factory has to pay a huge amount of time, resources and money.
3. Small batch customization will disrupt the production plan of the factory and affect the service of other important and large orders
As we all know, the production process needs to be arranged. This means that if a large order is placed behind a small order, the large order may need to wait. But the factory is very clear about the value of large orders and small orders. Therefore, small batch customization will disrupt the production plan of a low MOQ clothing manufacturer to a certain extent and affect the service of other large customers and orders.
4. High machine cost lead to high unit price
Some products require machine costs which is almost several hundred dollars. Assuming that the minimum order quantity is 300 pieces and the operating fee is US $150, then it is about US $0.5 for each product. And when you only need 50 pieces, the average share of each product is $3, which is six times! This price is unbearable for many purchasers.
Teach you how to start low MOQ cooperation with manufacturers
What should I do if I’m a start-up company and the funds are only enough for small batch procurement?
1. Show up your potentiality
Factories like to cooperate with big client which is self-evident. If you are a start-up, how can you persuade the supplier to pay attention to you? Try to draw a beautiful blueprint for the factory. Show your company’s planning, potential and strength to the factory, which is very helpful to promote cooperation.
2. Focus on long-term cooperation
As we all know, the cost and time of acquiring a new customer is much more expensive and longer than maintaining existing old customers. Therefore, most foreign trade companies will not do a one-off deal. They look forward to return orders and long-term cooperation. Therefore, in the process of price negotiation with suppliers, it can be said that it is to test the market demand, and a large number of purchases will be made in the later orders. Once cooperation with a certain supplier is started, a stable long-term cooperative relationship will be established and it is not easy to replace.
3. “Mix ” your order
In this case, you can mix various clothing in an order. You still need to meet the overall MOQ, but you don’t need to order a large quantity of each product. In this way, you can spread risk and capital to a diversified product line. However, this method is only applicable to some products.
4. Order from stock
Many factories will produce and sell ready-made styles in the market. Large scale production can reduce the unit price of products, and the purchase of spot goods can also shorten the production time and procurement cycle. Therefore, generally speaking, there will not be a very high minimum order quantity for ordering spot goods. However, this may lead to product homogeneity and profit transparency. What should we do? Please look at the next point.
5. Consider “light” customization
If the factory can’t accept a low MOQ due to the large production cost, but you still want to make your own brand or different products in the market, what should you do? It is suggested to use “light”customization methods, such as custom logo, packaging or slightly modifying the existing design.
6. Another point to note
If you follow the above steps, you can reduce the MOQ by at least 30%. But also remember that you can never order products with a quantity lower than MOQ at the lowest purchase price. Therefore, sometimes it is not worth ordering a small number of products, because when all the costs are added up, you may have to pay a fairly high price.
One suggestion is to negotiate hard with suppliers and know when to give up.