8 considerations when setting your wholesale MOQ (minimum order qty)
What should my wholesale minimum be is a question i get asked by members A LOT !
So whether you’re considering having no wholesale minimum order, a wholesale minimum that is structured differently than normal, or a wholesale minimum that is especially high -- there are some key points to consider in deciding whether that decision will ultimately help or hurt your business.
Price point :
Consider the price point of your products. If you sell a $200 bag your MOQ will be higher then a business who sells $2 cards. If the handbag brand sets her minimum opening order at $500, that will mean the store needs to order 5 bags (with wholesale at 50%); whereas if the card brand sets their opening order at $500, that will mean buying 500 cards (with wholesale at 50%). 500 cards is a LOT for an independent store owner
How hard is it to get supplies?
For some product businesses, the supply of their materials is a concern. Perhaps they are hand making each and every tea blend, and an excessive increase in large qty orders may not be achievable or maybe you are needing to buy large qty’s of material to make the products and therefore to make it feasible you need large qty orders. These factors would guide you to make your wholesale minimum higher. On the other hand, you might not have a lot of inventory or might have unique, one-of-a-kind supplies (like upcycled materials or limited-availability gemstones) -- that might mean you’d set your wholesale minimum lower, or even have a per-unit maximum. Similarly, you might need to produce a certain amount at once for a run to make sense (pointing to a higher minimum) or you might struggle to produce a lot at one time (pointing to a lower minimum.)
How much do you have to work for each order?
wether a wholesale order is $1,000 or $100, you invest time (and sometimes money) into the outreach to the store, answering questions, processing and packing the order, etc. All of that adds up to a cost -- and when you don’t set your wholesale minimum high enough, that cost can make it unsustainable
how established is your business ?
Someone who is brand new to wholesale will benefit SO much from having 5-10 boutiques they’re working with (in follow-on sales that arise from that visibility, in particular) -- and that might make it worth hustling a bit more for a bit less money at first.
Minimise the buying barrier :
This in my opinion is the biggest consideration. When a store owner takes on a new product, it is a big risk. For an independent boutique owner, spending $200 or $500 or $1000 on a set of products that aren’t proven sellers is exciting, but can be costly mistake. The lower you can wisely set your minimum the less risk you create for the store owner. That means the barrier to them buying your products is lowear.
Make sure your. product range is well represented :
Merching 101 - Ensure that minimum orders align with the presentation of your products.
If you have a range of essential oil perfumes, with 7 different scents, and the store only buys a few bottles of one scent, your range wont be represented well enough to sell likely won’t sell as well, in store, as it would if the owner had bought a few of each scent.
Simplify the structure :
The most common mistake in structuring minimums is to make it confusing.
Explore different ways to structure minimum orders, such as dollar amounts, unit quantities, or incentives for larger orders. Keep it simple and transparent
Here is a menu of different ways you can structure your order:
Minimum opening order (dollar amount): a minimum total order, like $250. Usually repeat order minimums are lower.
Minimum opening order quantity (units): a minimum number of items, like 25 cards.
Per-unit minimum: a minimum of each product, like 5 of each card.
Incentives for different order amounts: offering something like free shipping or a free display above a certain order amount.
Starter packs: offering a set mix of products as an initial order, usually best when there is a variety of products that won’t sell well in isolation.
Establishing minimums is like establishing pricing -- there are no hard-and-fast rules. Which means that after you’ve taken all of the above factors into consideration, your own sense about the minimum is a pretty big deciding factor. Set your minimum at a level, and with a structure, that won’t make you cringe because it’s a little unfair to the store… but not so low you’ll feel resentful or overwhelmed when you see a wholesale order come in.Long story short, you should absolutely do what makes sense for your business. Industry standards are evolving quickly, and what works for one product business may not work for you, it’s about recognising all key considerations and deciding what is right for your business.