When dealing with Chinese vendors, you must adhere to their minimum order quantity requirements.
How long they will remain compatible, how well they will ship, and how reliable they will be are all unknowns.
A random inspection would not be enough to confirm all of those. For products with a low minimum order quantity, you should give it a try.
Here, we summarize some techniques you can use at the negotiation table. Completion of this course will also equip you with advanced abilities. Are you curious? Let’s get down to business and start educating ourselves!
Why Suppliers Require MOQ
There will always be a MOQ (Minimum Order Quantity) in place to regulate the risks of financial loss in factory start-ups based on your orders due to the large quantities of raw materials and initial investment required to get the machinery ready for production.
If, as dropshippers, we place a large initial order with a new supplier, there is a greater chance of something going wrong.
Keep in mind that ultimately, all of them want your money. Therefore, the majority of your suppliers are open to negotiating terms.
Do not give the impression of weakness in negotiations with your suppliers. Take precautions and don’t doubt yourself. Take charge of the discussion.
For Negotiable Suppliers
Enable Your Authority
Make sure your vendors know you’ve done your homework. If you’re promoting a product, it means you’ve created a professional team.
Do your best to persuade them that you deserve their attention, that you can sell them something, and that you have plenty of relevant experience.
In one example based on our experience, a Dropshipper is debating whether or not to place an order for twenty drones.
The catch is that there are twenty distinct kinds of drones in the batch, and he only needed one of each.
He negotiates the Minimum Order Quantity (MOQ) with the suppliers by explaining the Units Per Transaction (UPT) and convincing them of his expertise.
These drones are widely used in the field of market analysis. In addition, he proposed a method of payment for the order and drafted documents to demonstrate a desire to work together, both of which will be discussed in greater depth in the sections that follow.
Naturally, he triumphed in the negotiation by proposing a minimum order quantity of 20 drones, one of each type.
If you do not have market data to back up your claims, assure the providers that you would still acquire them. In order to gauge customer response, you only need a few orders. And yet, you feel assured of the outcome.
After gathering feedback from your first round of market research, you’ll adjust the order’s influencers and make an order with a high minimum quantity.
In order to verify if your supplier provides consistent shipping service, you should tell them that you need to do shipping durability testing at a low MOQ. That you need make sure the packaging won’t get damaged by the design.
Plus, it’s a test of their ability to take the helm in a pinch. All of these things are essential to guarantee before beginning a collaboration with the supplier if you do not have a sourcing agency to help with the shipping.
The truth is that customers will complain and ask for refunds if their supplier does not ship their orders carefully. If you do this, your company will suffer serious consequences. What’s worse is if this occurs during the placement of a high minimum order quantity order.
It’s possible that your product has fatal flaws that would be missed in a routine inspection.
If you want to know what issues consumers may have with your product, do this:
Read the bad Amazon reviews of similar products to yours.
Write down everything that has gone wrong, and say what changes you would like to see made.
Communicate your worries to your providers.
Be on Their Side
No one ever got hurt on their first big business adventure.
Your supplier may tell you that they can’t afford to lower their MOQ to work with you. Tell them that you’re in the same boat and that you’re all in this together since you’re all facing dangers.
Express definite expenses, such as air freight, can be crippling if they come with an excessive minimum order quantity.
And assure them that this MOQ is temporary because you do intend to work with them for the foreseeable future. I think what you really care about is hearing about our previous collaborative efforts in their entirety.
We have now covered some of the most important things you can do to negotiate a low MOQ.
More communication skills advice; if your provider is comprehensible, putting this advice into practice at the negotiating table should be a breeze.
If, however, they prove to be an unmovable object, we provide some suggestions that might be more useful and persuasive.
For Adamant Suppliers
Evaluate the provider you’re bargaining with in comparison to others. If they refuse to reduce the MOQ, make it clear that you will look elsewhere for your needs.
Make it clear that you are the one who gets to call dibs. Create some anxiety on the part of your supplier and press for the low MOQ agreement you seek.
However, you should still look for a backup provider in case this one falls through. In case your Plan A also has a Plan B, you should have one ready.
Give a Deadline
In many cases, your supplier will be on the fence about accepting the deal you are offering during the negotiating process. The longer people spend weighing their options, the more likely it is that they will settle on the status quo.
Another possible response is something like, “My supervisor says no” or “We can’t take the chance.”
Set a deadline and allow them some time to talk it over. When used in conjunction with the previous suggestion, this one will convince them you have a second, less ideal option and encourage them to act hastily.
as well as knowing when to defend oneself and when to make peace with one’s enemies.
I indicated at the outset of this video that getting a factory to produce your goods will require both capital and a supply of raw materials. In order to have the machine up and operating for your company, spending the allotted amount is reasonable.
To ensure that the deal goes through, you can always give up some of the money you stand to make. Participate in covering the cost of their first setup.
Or indicate a willingness to pay a higher price per unit despite the smaller minimum order quantity.
Let’s say your provider is resistant to your efforts to persuade them. Try to get an increase in the MOQ from what you were anticipating. One hundred more, perhaps. Put one foot back and think about it from both perspectives.
It’s reminiscent of a medieval sword duel. You and your partner are the knights; as such, you must know when to attack, when to defend, and when to make peace.
Keep in mind, though, that if you’re hoping to place a single MOQ order, you’re out of luck. In most cases, the unit cost will go up when the minimum order quantity (MOQ) decreases.
If you put into practice the suggestions I made, I have no doubt you will make the sale.
Transform your company into a zero-sum game instead of a battle that must inevitably end in defeat.
To some extent, commercial negotiation can be thought of as an art form. Do your best to perfect it.