MOQ OPTIMISATION STRATEGIES FOR OEM SKINCARE MANUFACTURING
A company that produces a complete product or parts of it under a private label for other companies to market is known as an original equipment manufacturer or an OEM. A majority of the products we see on the market today, including skincare products, are created on demand by OEM companies. These companies are necessary as not every firm can afford to buy and operate a factory efficiently. Therefore, original equipment manufacturing is an excellent solution for both manufacturers and brands. OEMs enable these companies to keep their product lines active without having to invest millions in their facilities. It’s a win-win situation for everyone.
When seeking OEM companies, start-ups and small-scale skincare brands tend to prefer low MOQ OEM skin care manufacturers. Such OEM companies are willing to deliver small quantities to meet the scope of their businesses.
As a result, MOQs are a key metric for businesses in the skincare industry, and there are numerous strategies brands can implement to optimise their MOQs.
Why is Low MOQ Important in Skincare Manufacturing?
The minimum order quantity (MOQ) is the smallest number of items a manufacturer is willing to sell or produce. As each OEM has a minimum order quantity, skincare brands must be ready to purchase this MOQ to place an order with the manufacturer. Aside from manufacturing high-quality products, low-MOQ cosmetic manufacturers have contributed to the growing popularity of private-label skin care.
These are the three main reasons why low MOQ private-label skincare products have grown in popularity.
Helps with Market Testing
This is the primary reason why a low MOQ is ideal for new or small-scale skincare manufacturing firms. It enables you to evaluate the market before making a larger investment in production. You can find out if consumers value your products and are willing to buy them before committing to a larger order.
Improve Brand Recognition
Another significant benefit of low MOQs is that they facilitate brand recognition. Low MOQ OEM skin care manufacturers encourage small-scale skincare brands to enter the market and allow consumers to try their products. People are more likely to remember your brand if they have used your items and had a great experience with them. It might pave the way for you to build a great brand.
Reduce Costs
Last but not least, low MOQ private-label skincare helps small-scale brands to keep their costs down. You can save money on production and delivery costs as you are investing in a small number of products at a time. This is especially useful for emerging brands trying to stay within their production budgets.
With a low MOQ, skincare brands can offer high-quality products with less risk. It also helps them to adjust their inventory in response to market demand while keeping their costs low. Hence, it has become an essential factor to consider when deciding on inventory levels, as having too much product can be just as damaging as having too little.
What Impact Does a Low MOQ Have on Inventory?
MOQ can have a substantial impact on both producer and buyer inventory. With a low MOQ, both manufacturers and buyers do not require a large inventory since the average order size is small. The result is that the inventory level is low, with a higher inventory turnover and minimal holding costs. However, low MOQs might place an additional strain on the manufacturer’s sales force, as they have to acquire and manage more clients. Meanwhile, buyers will have to deal with high administrative costs due to frequent ordering. While both parties risk running out of stock as a result of maintaining less inventory, their risk of obsolescence or product expiry decreases.
Key Factors Influencing MOQ
Similar to how low MOQs impact inventory, there are various critical factors that influence the order quantity when deciding on MOQ.
Raw Materials
Just as buyers purchase final products from manufacturers, suppliers acquire raw materials for production. While finished goods may be accessible in inventory since they have a designated shelf life, raw materials often have a fluctuating shelf life and, therefore, can only be acquired after an order is placed. This can, in turn, have an impact on the order quantity a low-MOQ OEM skin care manufacturer is willing to supply for your brand.
Order Volume
The order volume is the centre of the MOQ, and it is determined by the break-even point where an order begins to generate a profit. Therefore, when making a decision, both manufacturers and buyers will need to focus on their target consumer bases. Furthermore, unit pricing or cost will be influenced by the order volume.
How to Optimise MOQs?
If you are a start-up or a small-scale skincare brand looking to work with a low-MOQ cosmetic manufacturer, paying attention to the following tips can get you the best deal.
Negotiate
An underestimated, yet a critical business skill is knowing how to negotiate a lower MOQ or a lower cost with your manufacturer. This strategy works best when you know the supplier’s stock maintenance. It will be considerably easier to negotiate if you have a good relationship with the manufacturer and they are overstocked or have a slow turnover.
Being a ‘First-time Buyer’
If you are a first-time buyer, it allows you to bargain for a lower MOQ. You can request a trial order where you can reduce the order amount. Most of the time, low MOQ private-label skincare manufacturers tend to agree to such requests. In cases where they charge a higher price, carefully iron out the financial aspects before placing the order. However, if you rely on this method, you will have to find new suppliers every time you want to make a purchase.
Use a Trading Company
Trading firms function as intermediaries, placing large orders on behalf of multiple customers. Using them to optimise MOQ is an excellent method, as they can split the manufacturer’s MOQ among numerous buyers. They are convenient since you do not have to engage in the negotiation process; instead, you simply make the payment and purchase what you require.
Mix and Match
Instead of ordering more of the same product, consider selecting several different products from the same manufacturer to meet your MOQ. It enables you to divide the required MOQ amongst numerous skincare products and purchase only the items you need. While it is not always feasible, it can be an effective strategy for lowering the MOQ.
Establish a Working Relationship
In contrast to the ‘first-time buyer’ method, developing a solid relationship with a single manufacturer might help you optimise the MOQ. Positive relationships with manufacturers can result in various benefits and opportunities, including partnerships, discounts, and lower MOQs. In such circumstances, most low MOQ cosmetic manufacturers will be willing to negotiate and alter their requirements.
A Leading Low MOQ OEM Skin Care Manufacturer in Singapore – Harmony Skin Lab
Harmony Skin Lab is a GMP-certified low MOQ private-label skincare manufacturer based in Singapore. We transform your creative ideas into premium and commercially viable products that you can discover in the market. Our ODM/OEM skincare products R&D team can provide unique formulations for a variety of your customers’ skincare needs. Our services begin with formulations and extend to production, quality control, packaging, and labelling, as well as distribution. To learn more about our offerings, contact us today!
