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Why do the factories have high MOQ requirement?
Visits 93  Date:2014/5/15 5:53:50  

A. The factories invested huge amounts to build a factory and, more importantly, write the paychecks.
Maintenance of assets is also a constant hole that sucks in cash.
They need big orders and big buyers to keep their factory operation in a good flow.
They need big profits via these big orders to cover these production costs.

B. The factories also have to buy the parts and materials from the material suppliers. No matter how small an order is, they will need to make moulds and dies for it, and they'll need to purchase all required materials. Unless the order is for regular models that the manufacturer frequently makes and, while it happens that there are preserved quantities available in their stock, they may be able to offer you a wholesale rate that they usually give for a large order quantity. In reality, however, many buyers want to have specific design(s) for their order. The manufacturers' material suppliers also have their MOQ. In order words, the factories will have no choice but to order a relatively large amount of each material needed for a specific order. They thereby lose but not profit from the order. Concern about price will be discussed below.

C Unlike the stock market where deals are made virtually in a flash of time, production of an order takes real time and space. The manufacturers need to schedule dates and times, and number of workers and materials for the production of any order, regardless of the quantity of it. This process itself produces cost. Nevertheless, when an order is rolling on the line, other products will have to be pulled over or delayed. This is to say, that the opportunity cost of a small order partially includes the profit off a confirmed large quantity order. The real question is, why should they compromise so much for unconfirmed small orders with uncertain potential customers over existing cash cows?