Reply To: Advice on MOQ

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Regan Blee
Regan Blee
Keymaster

Cherie,

Thanks for posting the PAB.

1. Is it too risky to order above the PAB recommended first order amount?

I don’t think it is wise to order above the PAB.  The MOQ is 6 months of inventory based on the PAB.  That is a lot of money to tie up for a long time.  The PAB is designed to help you make good use of your investment and have a manageable cashflow.  Typically, 3 months of inventory is a good use of money in this business; 6 months is just too long.

2. How do I use the PAB to calculate the cost of ordering 3000 units, so I am clear on the total costs – COGS, shipping etc.

I’d just create  new line called “honey dispenser – 3000 moq” and overtype cells AD, AF in the ‘New Product Analysis US ‘ worksheet and cells h6 and J6 in the ‘First Order Calculator US’ worksheet.

3. Should I negotiate with the supplier about ordering 3000 units, but hold 1500 units for me and ship 1500 units, so I “can stagger’ the shipping costs.

Yes, you should negotiate the order.  Ideally, you should try to order just 1500.  Ordering 3000 now will tie up some of your money even if you don’t ship it all.   btw. it’s not just shipping costs that you need to stagger.  The COG is the biggest cost.  Amazon storage for 6 months inventory is going to add up too (especially since it will include q4).
Work with the SA and supplier on different plans to either reduce the MOQs or make payment plans etc.  Your ideal plan is to order and pay for 1500 units now (via standard deposit and balance payments) and then order and pay for 1500 units in 3 months time – aim to get as close to that cashflow as possible.

4. Should I look at this product at a later time  even though the MOQ issue will still be there and launch another product that has a lower MOQ, but meets the PAB criteria?

If you cannot get them to budge on the MOQ then I’d say that you should seriously consider parking this product until later.

 

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