Reader Question: MOQ for High Value, Customized Item
Hi Dave,
We went through your articles and it’s tremendously helpful. I have one question: We’re planning to import about $10,000-$15,000 worth of products for our family entertainment center. Most of our orders would be custom products, predominantly regarding theming, i.e. printing our custom theme mascots, making rides and inflatables with our mascot faces, etc. I've read your article on customized products and how MOQs are much less flexible for customized products. Is this the case even for high value items, such as ours which seem to be around $700-$1000 each in China?
Paul
My Response:
Paul is looking to import high ticket items from China. He figures the cost in China is about 1/3 of the cost to buy domestically, in other words, if he spent $45,000 in the U.S. he could get similar products for $15,000 in China. This is a unique side of importing where customers look to import from China not necessarily to resell but instead they import for their own consumption (either personally or for their business). My father did something similar himself recently, when he imported one inflatable boat for his own use. He paid about $2500 where it would have cost $7500+ to buy locally.
For high value items like this, Suppliers are often receptive to small orders. A Supplier selling 100 iPhone covers to someone and making $0.05 a piece isn't worth their time; but it is often worth it for a Supplier to sell one inflatable boat and make $1000. Paul would likely be able to find a Supplier happy to sell him a very low number of products for his entertainment center, but the challenge is that he wants customized products.
Paul is going to run into the same MOQs for customized products like this in China as he will in any other country. No matter if China, the USA, or Mars, certain customized products will require custom screens, tooling, molds, etc. Any Chinese Supplier would be happy to sell him one product but they're going to charge a setup fee which may not make it economical to import just one one product. Next, when you factor in the cost of landing the product (which is going to be no less than $500-$1000 if these are bulky items) the costs start to get prohibitive.
Another very big challenge will be overseeing quality. Customized products are always challenging no matter the country and especially with China. Paul could request a Mickey Mouse mascot and receive Splinter. Most Suppliers are going to want a 100% deposit (or at least 70%) and therefore will have little motivation to fix any problems. Therefore, if he's requesting several products, he should pay for only one product first, receive it, and then give feedback before proceeding to more products. If his customizations are detailed he must remember that communication problems are common. He should confirm, re-confirm- and re-re-confirm every specification with his Supplier (do not take ‘yes' or worse, lack of clarification, as understanding).
He should also keep in mind that on such a small production run like this, it will be very difficult to have quality that matches what he could have done domestically. He should set his expectations accordingly although he may very well get perfectly acceptable quality products.
There's a good chance to save money importing products like this from China, although it will probably be less than originally estimated and the quality differential may not make it worthwhile.
