When you’re in search of a new custom jewelry manufacturer, there are a lot of things you need to keep in mind: pricing, available materials, sustainability practices, the list goes on and on. But one thing that might impact your jewelry business more than you realize is a manufacturer’s minimum order quantity (MOQ). This is a consideration that will determine the amount of inventory you have on hand and how much money you put into production. Let’s explore what you need to know about MOQ and how a manufacturer’s MOQ will impact your brand.
What Is Minimum Order Quantity (MOQ)?
Minimum order quantity is the smallest quantity of a product that you can order from a manufacturer. MOQ can either be a unit amount (like 500 rings) or a total order value (like $500). Setting an MOQ increases cost effectiveness and helps manufacturers avoid wasted resources like the materials and time that go into production. Manufacturers determine their MOQ using factors like estimated production timelines, cost of materials, and cost of labor.
How Does a MOQ Impact Your Jewelry Business?
When you’re searching for a new jewelry manufacturer, you should always inquire if they enforce a minimum order quantity. MOQs impact your jewelry business by influencing up-front costs, including inventory costs and logistics requirements, so make sure a potential manufacturing partner's requirements work for your business before you start working together.
One of the most notable direct impacts of MOQs is on your inventory costs. These can include paying for production, ordering, and storing your inventory. Production costs are what a manufacturing company will charge to produce your jewelry, but ordering costs include all the other factors that go into production, like processing, shipping, and handling fees. On top of that, you’ll need a place to keep your inventory once you have it on hand. Although there are options when it comes to inventory, they all come with costs — maintaining your own warehouse space will require recurring storage fees, while outsourcing and dropshipping have their own pricing structures that typically include the cost of processing incoming and outgoing orders.
How these costs add up will depend largely on how much inventory you order at once. If a manufacturing company has a particularly large MOQ, you could end up paying a lot of money up front for production. Then on top of that, you have to figure out how to store all that jewelry inventory. Those costs accumulate quickly, and they’re all front loaded before you ever make a sale.
What Are the Pros and Cons of MOQs?
We already saw how an MOQ will impact your jewelry brand’s production roadmap, but as with everything, there are advantages and disadvantages. Let’s take a look at each side:
Pros of a Minimum Order Quantity
If you know you’re going to be producing a large quantity of jewelry, then working with a manufacturer that has a minimum order quantity can save you money in the long run. If your brand is well established and you have already proven that a piece of jewelry is going to be successful in the market, you might benefit from ordering large quantities at a time; ordering the minimum order quantity (or more) might get you volume discounts on production, which bring your costs down and increase your profits.
Cons of a Minimum Order Quantity
On the other hand, working with a manufacturer that has a minimum order quantity might cause you to spend too much money on a jewelry product you're unsure about. If you’re beginning a new line, it’s risky to spend a lot of money on big orders; if they don’t sell, then your savings are tied up in inventory. Even if you have a product that you are pretty sure will sell, you might want to spend part of your budget on other business needs, like marketing, e-commerce tools, packaging materials, employee salaries, or a myriad of other line items that go into running a company.
Extra inventory can also take up valuable space in your warehouse, storage facility, or office space. Space, just like time and money, is valuable. If you’re just starting out and have a small office or store, you might have to sacrifice some desk area or floor space just to keep your jewelry stock on-site. Having a large minimum order quantity can disrupt your business’ resources and your physical space.
When you’re just getting started or you’re testing out a new jewelry product, working with a manufacturer that has no minimum order quantity is a huge perk. It eliminates a lot of the issues that come with inventory costs and any stress that comes with having too many products on your hands.
MJJ Brilliant never enforces minimum order quantities so you can make the best decisions for your business with every individual order. No matter how few or how many pieces you want to produce, be confident that you can dabble in new designs without the pressure of committing to hundreds of units. Test out the waters, use your budget the way that works best for your company, and keep your inventory costs low. Get in touch today to find out how MJJ Brilliant can help your jewelry brand be as successful as it can be.