What is your minimum order quantity from the China factory?
That’s a question I hear at least several times a week, and there’s no definitive answer to that question. It depends on many different factors. Let me try to explain:
First and foremost, a China factory (or any factory for that matter) prefers to work with larger quantities because of the set-up costs and planning efforts are the same for a small quantity as they are for a large quantity. They still need to make patterns….still need to calculate the fabric usage and labor per unit….they still need to identify and source labels, packaging and other components…and then they need to file all the necessary forms with the government agencies. So all these costs are the same regardless of quantities, but then they must be amortized over the quantity of units being produced.
Another common issue is when a customer wants, for instance, 1,000 units of an item (not a bad quantity) but then they want it spread over 5 colors and 3 different sizes. That’s a problem. First of all, finding small quantities of a particular fabric/color is difficult. Secondly, now the factory will need to spend a lot more time finding all 5 colors AND will need to make 3 size patterns instead of just one.
Freight: shipping small quantities is expensive. There’s a minimum freight cost that ocean carriers charge and there are also certain fixed costs associated with processing these shipments. Those fixed costs are the same for 500 pieces as they are for a container. So these processing costs (UPS charges, government filings, customs processing etc) must be spread over the number of units being imported. For instance, assume these costs are $250. per shipment. If you were importing 1000 units then the cost per piece for this line item would be $0.25. If you increase your order to 2,500 pieces then the cost would fall to just $0.10
The lesson here is if you have a small quantity you need produced, your best bet is to limit the number of colors & sizes – and to understand that certain fixed costs associated with the shipping will need to be amortized over that quantity.