Minimum Order Quantities - 'it depends'

All factories have a minimum order quantity.  If you want to order more, there’s no problem, but if you only want a small quantity things can get difficult very fast.  I'm always being asked, ‘What’s the minimum order quantity?’  Unfortunately, it's not an easy question to answer and my first response is usually 'it depends'.  I know that's frustrating, but let me explain some of the factors you need to consider.

 

1. It depends on the product value.
Generally, low value items have a higher minimum order quantity.  For example, you might want non-woven bags with your logo printed on them.  The biggest cost in making these is setting up the machines and testing to get the colours and the logo right – this is a fixed cost whether you want 100 bags or 100,000 bags.  The bag material itself is cheap and factory only needs one person to flick a switch to make thousands of bags, but it still has to cover the cost of setting up.  If you only want a small number, the price per bag simply gets too high.
On the other hand, the materials cost for high quality packaging (say you want to present your jewellery or premium wine or homewares in a rigid shaped box with a leather-look exterior, lined with velvet and stamped with your logo in silver both inside and out) is much higher.  The production process is also more labour-intensive.  So overall, fixed costs are a smaller proportion of the total cost and a smaller order is more practical.
 

2. It depends on the product specifications.

If you simply want a blue bag with a white logo, that’s easy and doesn’t require much setup.Now imagine you specify the PMS colour for the blue and you require the logo to be positioned precisely 3cm from the top left corner of the bag, plus you want a gloss finish on the blue but not on the logo.The limitations on the blue may increase cost.Setup time increases.Quality control becomes more complex.Wastage goes up.
The same principle applies across all kinds of products.

3. It depends whether the entire order has exactly the same specifications.
Think about sizes for clothing or shoes.  Colours and designs for fashion and homewares.  You might order 10,000, but if you have 5 different sizes and 4 different colours, you actually ordered 500 each of 20 different items.  That’s a lot more setup and quality control work for the factory.
 

4. It depends on the factory size.

Let’s say setting up the machines to produce bags takes 30 minutes.One factory has capacity to produce 1,000 bags per hour, another can produce 10,000.You want 50,000 bags.For the first factory, that’s several days’ work and worth considering.For the second, it’s not even one full day of operation.They probably won’t be interested.

5. It depends how busy the factory is.
Then again, if they have no other orders, maybe they will consider a half-day job.
 

6. It depends whether there will be repeat orders.
Everyone wants a long term customer and repeat business which they know how to do.  Don’t expect too much from this at first though.  Unless the factories have some reason to believe in your repeat orders, or have done work for you before and see you as a steady customer, they’re more likely to focus on what is guaranteed.
 

7. It depends how urgently you need the product.
If you’re willing to wait until it suits the factory’s convenience to fit in a small job around their bigger orders, they may consider a smaller quantity.

 

With all these issues to consider, you can see why it’s difficult to set minimum order quantities on the spot!  It gets even harder when clients want a custom-designed product.

You might ask, after so many years of experience, can't we sense whether a particular order quantity is likely to work?  Yes, but we still don't want to commit until we're sure.  We's rather be cautious than let you down later.  So the first answer's still likely to be 'it depends'!


Ilga Horvat

Operations Manager at Hornet Import and Export Group Pty Ltd

Hornet helps companies source products from overseas, mostly China but also increasingly India. We aim to save you time, money and stress by taking care of the sourcing and import process, so you can concentrate on growing your own business. Our clients range from boutique retailers (photography props, wall decals, candles) to retail suppliers (shop fittings; promotional/gift packaging; branded premiums; fluoro lighting) to industrial (custom moulding, mining equipment) and beyond.


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