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Reasons Why MOQs are Important to eCommerce Sellers

by Tyron Denson

Minimum order quantity or MOQ is an essential factor for eCommerce sellers to think about before placing an order. The MOQ of suppliers varies between them as some are much higher than others while others are lower than others. Several factors determine how suppliers set their MOQs, like the type of product, cost of production, and profit margin. Depending on the type of MOQ offered, they all have benefits. In this extract, we discuss the importance of MOQs to eCommerce sellers. 

Importance of MOQs to eCommerce Sellers

MOQs can be both beneficial and disadvantageous to any seller. However, By learning how to navigate them, you can gain a lot from them and notice significant growth in your business. The following are reasons for considering MOQs;

1. Ability to Choose Suppliers

Different manufacturers offer varying MOQs depending on the items they produce and the overall factors affecting their companies. Such factors limit the number of suppliers you can work with or the number of products you can afford. To meet the requirements of a high MOQ, you must be prepared with enough storage area and money to cover the cost. If your budget is lower, you are free to choose a supplier with a suitable MOQ.

2. Determines Your Cash Flow

The set MOQ directly influences the flow of cash in your business. Using the supplier MOQ, you can calculate the amount of money you’ll probably spend, the cost of each item, and the profit you’ll make from each product. An eCommerce seller should take great caution, especially if the MOQ is high, to avoid having too many products in storage and no money left to run other business matters such as marketing and advertising.

3. Purchase High-Quality Products

Most business owners aim to gain sell good quality products and gain profits from their business. Same to manufacturers or company owners, proving their effectiveness and running something profitable is vital. MOQs help them achieve that, plus many other factors associated with their production. Suppliers with a high MOQ are known to have high-quality products which attract customers and lures them into spending a lot of money. Research widely on any company offering very low MOQs to ensure what they are providing is genuine and in good shape.

4. Determines the Warehouse Space

As a new eCommerce seller, the possibility of having a small storage space is high. MOQs help you estimate the number of goods you can have at a go or if sourcing for extra storage is necessary. Knowing the number of goods to order per your space reduces costs incurred when looking for proper security to protect the goods, extra staff members, or high insurance costs.

5. Limits Reordering

Two types of MOQs exist that is low and high MOQs. Know how fast your products last before selling out. Use the given MOQ to know how much you can order at once to avoid reordering as it consumes too much money.

Conclusion

Understanding MOQs is a great step to using and benefiting from them. They help estimate profits, prepare your warehouse space, know how many items you need at a go, and many more positive aspects. Despite focusing on the eCommerce seller, suppliers also use MOQs to their advantage hence both parties gain.

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