Archana Nagarkar| 10 min read | April 22, 2020
1.Why is MOQ required for a wholesale business?
Definition : Minimum Order Quantity (MOQ) rule forces your wholesale customers to spend a minimum amount or quantity in one delivery. This means wholesale customers must purchase a minimum quantity of your product or spend a minimum amount of money when placing an order.
For example, if you set a rule for minimum order quantity, e.g, minimum order of 5 items or $150, your customers must purchase at least 5 items or spend $150 to be able to buy from you.
1.1 In wholesale we have to give discounts which means reduced margins.
When you’re selling to wholesale customers then you have to offer them discounts. Offering discounts to your customers definitely helps to boost sales, increase customer conversion, retain customers, etc. but also its effects to your profit margin.
1.2 In wholesale there is more competition as average order value is higher.
As average order size is big, a slight variation in price means lots of money. Customer will cross check a few shops before he will purchase.
Knowing this business aspect all wholesale businesses are competing and selling at a reasonable competitive price.
1.3 Customers know a lot about product and market prices.
Wholesale customers always analyze products and market prices so they know a lot about that. So offering a competitive and reasonable price to your wholesale customers is always a good practice to attract customers and boost sales.
1.4 Customers are expecting higher quality services before ,during and after order execution.
As wholesale customers order value is big so are there expectations of quality time bound services from ecommerce wholesalers. This means they will have to spend comparatively more time and effort on services per order.
1.5 In wholesale repeat customer ratio is very high
In wholesale business repeat customers is a fact. As a wholesale dealer is offering quality services, reasonable prices, discounts.
1.6 Number of resources available to wholesalers is always a constraint.
A wholesaler would like to keep down his expenses hence will keep fewer man power.
1.7 Each order will result in additional administration efforts.
In other words irrespective of order size there will be a minimum administrative and delivery cost associated with each order.
1.8 Each order will result in handling cost.
In wholesale trade customers expect they should not be charged handling cost. This means that handling costs should be absorbed and should be taken care of by profit margin.
1.9 For shipping to be economical there should be a bigger parcel.
A customer purchases in bulk to save on overall cost of purchase.One of the components of overall cost is shipping.A bigger parcel will have a comparative lower shipping cost in percentage of order value.
To achieve most of the above points putting a minimum order quantity is the most recommended feature.
2.What are the options available in shopify by default for MOQ
Options for MOQ on Shopify ( excluding shopify plus plan )
If you’re not in Shopify plus plan then you can’t set MOQ at configuration level or by applying any discount rule.
There are code level changes you can do in the Liquid file and set MOQ on product or cart level.
Contact us for code level modification and we will come with a quote.
The way out to discourage smaller orders is to have a higher handling cost per order. Another way is to give a coupon discount on higher value orders.
Business Case :
If you’re having few products at your store and you want to compel a minimum quantity to be ordered by customers else no checkout or add to cart.
And to achieve this, you might be thinking if I set a minimum quantity number at product page setting configuration from shopify admin.
No, but practically in Shopify default you can’t set directly at product setting level.
To achieve this you can add a bit of code in a liquid file.
We also would like to recommend you apps. See in section 4.
3. Different Levels of MOQ
MOQ can be applied at different levels. Below are given some levels to define MOQ.
At cart level :
By defining minimum order value or minimum quantity for a given customer group or for all customers.
At product level :
By defining minimum order qty or value for a given product
At Collection level :
By defining minimum order qty or value for a given collection.
At Vendor level :
By defining minimum order qty or value for a given vendor.This is generally done where dropshipping is the way to deliver orders.
4. What are the apps that can provide these features
We would recommend some apps that can provide these features, you can try these apps below:
- OrderLogic ‑ Min & Max Limits
- MinCart ‑ Min Max order limits by Molsoft
- Minimum Orders by Dash Technologies
- Advanced Order Quantity by Extendons
Note : If these apps do not provide your required business logic, please contact us and we will create a specific solution for the site.
5. What are the features available on shopify plus:
In the Shopify Plus plan you can set minimum order value in two ways:
1. Set limit at customer group level for minimum order value.
Using this feature, you can set the minimum order value at customer group level. So an associate group of customers must submit orders that meet or exceed the amount set for the minimum order value.
From the reference to the above business case, there are 3 different customer groups naming, Bronze, Silver and VVIP. For each customer group assigned a different Min order value and Minimum order quantity.
The customers associated with (Bronze customers group) must add 10 or more quantities or must purchase an amount of 200 or more. They can’t buy an item below the defined qty or amount in MOQ.
The customers associated with (Silver customers group) must add 5 or more quantities or must purchase an amount of 150 or more. They can’t buy an item below the defined qty or amount in MOQ.
The customers associated with (VVIP customers group) must add 2 or more quantities or must purchase an amount of 100 or more. They can’t buy an item below the defined qty or amount in MOQ.
2. Set limit for the complete store for minimum order value.
Using this feature, you can set the minimum order value at store level. your customers must submit orders that meet or exceed the amount set at store level.
From the above reference image, customers must purchase for the amount of $150, below that $150 customers will not be able to purchase from the store.
6. Benefits of MOQ
If MOQ is applied then only we can pass proper discounts to wholesale customer groups, while charging a higher cost to retail customers who are not doing bulk buying.
We can expect profit per order increased and improved order value with MOQ.
Customers will be happy as they will get products at a reasonable rate and will always plan for bulk buying.