When opening a clothing line or collaborating with garment manufacturers, the concept of MOQ (Minimum Order Quantity) will become your catchphrase. MOQ is an important aspect of costing, production planning, sourcing of fabrics, branding, and your business success in general.
The knowledge of MOQs operation will ensure that you do not spend money unnecessarily, negotiate better, and establish an intimate relationship with suppliers.
We, dhaka-apparels.com, have the MOQ explained! Start reading now!
What Does MOQ in a Clothing Line Mean?
MOQ is an abbreviation of Minimum Order Quantity, and it is the number of pieces that a manufacturer or a supplier is ready to make in a single order.
For example:
A factory can need 300 pieces of each color, or
500 pieces per style, or
1000 pieces per order.
MOQs make production economically viable to the manufacturers since small amounts are economically costly, and they also interfere with their production process.
Understanding how garments move from fabric to finished apparel will help you realise why factories set MOQ limits. You can read more in this step-by-step guide on clothing production – From fabric to fashion.
What Is the Rationale behind MOQs Set by Manufacturers?
It is a typical question of many new owners of clothing brands: why can’t factories merely make 20 or 30 items? Here’s why MOQs exist:
The Sourcing of Fabric and Materials
Factories buy fabric in bulk. MOQs were also established by Mills on fabric rolls, trims, labels, and packaging. Manufacturers therefore have to comply with these minimums to maintain the price under its usual level.
If you want to understand how fabric choices affect MOQ, explore this detailed guide on types of fabrics, pros, cons, and uses.
Production Efficiency
Machines and the sewing lines are more effective when there is a large production. Minimal-sized runs cause waste and slowness of work.
Cost Management
The establishment of patterns, samples, cutting, and stitching needs time and manpower. Minimal amounts are not worth the cost of operation.
Profit Margins
The factories have low margins. When the order is small, they will not make a profit unless they offer the product at a high price. This is also why many entrepreneurs compare apparel vs garment manufacturing before choosing a supplier.
Types of MOQs that You Can Come Across
Various manufacturing companies organize their MOQ differently. The most prevalent ones are:
- MOQ per Style
Example: 500 pcs per design.
- MOQ per Color
Example: 200 pcs per color option.
- MOQ per Fabric Type
Materials with special purposes, such as denim or organic cotton, might have an increased MOQ.
- MOQ per Size Ratio
Some factories have a particular breakdown (e.g., S:30%, M:40%, L:30%). This knowledge helps you to be smarter in negotiation.
The Effect of MOQ on Your Clothing Line
MOQs affect your overall business concept, budget planning, to inventory plans. Here’s how:
Budget Requirements
The increase in MOQ results in increased upfront investment. Within the context of a startup, you will have to determine:
- Cost per piece
- Total order value
- Inventory cost
- Storage and shipping fees
A low-cost per-piece supplier may be required even when your budget is small, on the assumption that the supplier has low MOQs. If you are selling online or planning to enter the ready-made market, you should also know how stock garments can increase ecommerce profits.
Inventory Management
MOQs are the quantity that you have to buy at a time. Large quantities may cause:
- Overstock
- Cash flow issues
- Slow-moving inventory
They are also useful in cutting down the unit costs and increasing the profit margins.
Product Variety
Higher MOQs could delay your first launches. An example is that you can only actually afford to produce 2 styles in large numbers rather than 5 styles.
Pricing Strategy
The cost of production is one of the factors that determine your retail price. Reduced MOQs = high unit costs. Increased MOQs = reduced unit costs.
Low MOQ vs High MOQ: Which is Better for You?
It has its advantages and disadvantages depending on the stage of operation.
Low MOQ Benefits:
- Good for startups
- Allows product testing
- Less risk of unsold stock
- More design flexibility
Disadvantage: Increased per-unit cost.
High MOQ Benefits:
- Cheaper unit price
- Better margins
- Suitable for scaling
- Easier material sourcing
Disadvantage: It is expensive to invest in and store.
How Should You Negotiate About MOQs with Manufacturers?
- Show Long-Term Commitment
When they perceive the possibility of repeat orders, the factories become more accommodating.
- Ask for Mixed Designs
Example: 500 pieces, all but divided into 3 styles.
- Increase Price per Unit
Other suppliers will reduce MOQs when you consider paying a little higher unit price.
- Use Standard Fabrics
The selection of fabrics that are easily available makes the order quantity less demanding.
- Start with Sampling
After approval of your sample and making trial orders, manufacturers can lower MOQs in new runs.
If you want to choose the right supplier, check this useful guide on finding apparel manufacturers in Bangladesh.
Impact of MOQs on the cost of production.
Here’s a simple breakdown:
High MOQ Order
- Lower cost per piece
- More efficient production
- Fabric mills were offering better prices.
- Lower shipping cost per unit
Low MOQ Order
- Higher cost per piece
- More time and labor-intensive.
- Harder to source fabrics
- Less profit margin
Knowing this will assist you in positioning your line of clothing at the right price.
Find the Appropriate Manufacturer Depending on the MOQ
While choosing a supplier, keep in mind:
- Your budget
- Your design complexity
- Your target market
- Your storage capacity
- Your long-term business plan
If you are new, a low-MOQ manufacturer will assist you to get small. However, in case you want to scale, a high-MOQ factory is better at the margins.
Common Mistakes Clothing Startups Make with MOQs
- Ignoring Inventory Risk
- Producing excessively early results in non-selling stock.
- Selecting the least expensive Factory
- Cheap prices can be translated to poor quality and untrustworthy output
- Failure to Consider MOQs of Trims and Labels
- MOQs also include zippers, buttons, packaging, and tags
- No Clear Size Breakdown Plan
- Not making the factories be aware of the number of pieces per size.
When Should You Raise MOQ?
Increasing your MOQ is suggested in cases:
- Your brand demand grows
- You consistently sell out
The higher the quantity, the better the rate is given by the supplier.
- You want to scale production
- You have strong cash flow
Increased MOQs give you the advantage of competing with well-known brands through reduced cost per unit.
You may explore more manufacturing-related insights here: garment manufacturing tips.
Conclusion
MOQ is very important in the operation of a successful clothing line. It has an impact on cost, inventory, branding, and scalability. Being a novice fashion businessman or expanding your clothing enterprise, you will be able to make correct financial choices and develop better relationships with suppliers when you understand the nature of MOQ.
