Jul
02
What does MOQ Mean and How to Calculate It?
In the world of retail, having the right, and the right amount of inventory is a key aspect of your business. You would want to make sure that you always have enough stock when a product picks up so you are not losing the opportunity to sell and make a profit. But at the same time, you also want to make sure that you do not end up with overstock inventory that can hurt your profit margin. For this reason, you have to be careful when determining your Open To Buy (OTB) budget for each product based on historical data or the initial investment you are willing to make.
Once you have your Open To Buy budget set, you can start the sourcing process. If you do not yet have a supplier you are working with, Minimum Order Quantity (MOQ) can be a good filter when choosing one. If you do have a long-standing relationship with your wholesale supplier, you are likely familiar with their MOQ, and depending on the relationship you have, you can negotiate some room for flexibility.
In this article, we are giving you an overview of what MOQ means, what factors you need to consider when calculating it and how the calculation itself works. Also, we will provide you with some tips on how to make the most out of MOQs set by your suppliers.