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MOQ is an acronym which stands for minimum order quantity, and refers to the minimum amount that can be ordered from a supplier. For example, if a supplier advertises a MOQ of 1,000 units, you must be able to purchase at least 1,000 units to be able to deal with that supplier. MOQ's will either be quoted in dollars or in units. Sometimes MOQ is also referred to as MQO, or minimum quantity order.
Why suppliers have MOQs
Wholesale suppliers usually operate on very low profit margins which means they rely heavily on bulk-buying customers to make a profit. Although new business owners can sometimes find the large investment necessary to meet the MOQ difficult, ultimately it's necessary to get the best wholesale prices available.
Some suppliers do not have a MOQ, which is very useful for new sellers who can only afford to buy say, 100 units; but often this means that you end up paying more per item than someone who buys 1,000 units, for example.
How MOQ's affect online retailers
MOQ's can affect new online retailers by preventing them from being able to deal with certain suppliers and distributors that only deal with large companies with physical stores. This may mean they have to use smaller and sometimes less economical suppliers who do not set large MOQ's, but who have to charge a higher price per unit to make a profit themselves.
For this reason, new online retailers who are looking at using distributors with low to no MOQs should consider selling items with little to no competition. Retailers who want to sell competitive items, but can only afford to purchase small quantities at a time, will soon be drowned out by larger retailers who can afford to buy in bulk.
These requirements aren’t meant to make it difficult for small businesses, but like the article says, meant to make the wholesalers’ efforts profitable. The profit margins are typically pennies (it’s bulk or bust for wholesalers).