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Am I allowed to rant about minimum order quantities (MOQs)?
I’m trying to understand the insanity of all of these companies insisting on MOQs of 10kg+. Am I the only one who thinks it’s absurd?If you are using an active at a 1% concentration, that would be enough to make about 20,000 50ml jars of moisturizer. Are there really that many producers out there who can buy in such quantities?I realize there are resellers for many of these ingredients, but definitely not for all. I am wondering why none of these manufacturers have “wised up” and started selling more reasonable minimums (e.g., 1kg), and then just raised their unit price considerably? Or is it just not worth the trouble to them?End of rant. -
7 Replies
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You might not understand industry.
1) Many of these mfg’s do not want their products in the hands of amateurs. You would be wrong to think they want everyone to have their goods.
2) You can contact the re-packer of your choice….and they will list hundreds of ingredients that mfg’s will NOT sell them (even if they met MOQ)…because they know their end market. On products that are on the edge…they will REQUIRE the re-packer to alter the name (that should shed some light on their attitude).
3) I have several times contacted suppliers, and was willing to buy their MOQ, with the intention of selling off the bulk of it….ABSOLUTELY NO (most times).
4) If you look at INCI’s of some super big or premium brands…you will find things like emulsifiers…that they have exclusively. No one at any level can buy it. Meaning….they will sell an exclusive license to that producer if they can buy enough of it.
The industry does not intend on being all inclusive. They have heavy pressure from the big companies that produce end product, to eliminate pop-up sellers from finding an easy way to compete with products they spend hundreds of thousands of dollars creating and testing.
You can not imagine the iterations I have gone through, chasing those ingredients…with lesser ingredients.
As a person from industry (granted a different one), I agree wholeheartedly with their approach. When I was in industry, and had a superior product, I only wanted it in the hands of those that would make it shine. In lesser hands, my superior product could be made to look bad.
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These samples (from the distributor) and the products themselves are intended properly for commercial manufacturing. We generally deal with or have no issue with the MOQ’s. Keep in mind that they are not targeted to home formulators.
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Well, if you are willing to be resourceful you can find almost everything. It’s the matter of price and your willingness to spend hours on repackagers websites across the globe. You can even find Dow’s w/si surfactants is you are willing to use google translate and order from places like Russia. What are you looking for? Maybe I saw it somewhere.
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As @Microformulation said also they supply manufacturers around the globe.
Or is it just not worth the trouble to them? Yes.
If you want something, you can ask in here too. Many members are very well familiar with many repackagers. -
The manufacturers of raw materials are just not interested in selling to companies (or people) who only want to buy 1kg.
@Graillotion - makes some great points. The only thing I would slightly disagree with is that there is any “exclusivity” going on. If a company demonstrated they were going to purchase in large enough quantities, the raw material supplier would be happy to sell it to them. There really aren’t many ingredients that are exclusive to big companies. In fact, one of the complaints I’ve heard from suppliers is that companies like L’Oreal tie up ingredients in patents and that ruins the market for the raw material supplier.
But my explanation for why there are such high MOQ is that raw material suppliers would rather have 10 customers who buy the entirety of a raw material run, than 1000 customers who buy it. It’s just much easier to deal with 10 customers than 1000.
Big companies like BASF don’t want to deal with customers who think 20,000 jars of a product is a lot. They want customers who will be making millions of jars. They want customers who think 20,000 is just a rounding error. In truth, they actually don’t even see the Cosmetic Industry as a significant customer since the volumes/profits are much lower than automotive, paints/coatings, pharmaceutical, or other industries. Cosmetics to them is puny.
When I worked on the VO5 brand we sold over 50 million bottles a year. And even we were not big enough to warrant anything other than a distributor from BASF.
So, it’s just a matter of perspective.
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One more point, big companies have no interest in eliminating pop-up sellers. Big companies primarily care about what other big companies are doing. Startups and pop-ups don’t represent a significant enough threat to even care about.
During my time in industry, I spent time as a “cost savings” chemist. My job was to look at all our formulas and see where we could save money. One rule was that if a project would not bring in at least $100,000 in annual savings it was not even worth working on. And my company was a cheap mid-sized company. Places like P&G probably put the savings at $500,000 or even $1 million. That’s the mentality of big corporations.
That’s why they don’t even care about a pop-up company that might make a few thousand or even tens of thousands in sales. It’s a rounding error.
Also, big companies rely on the small startups to take the risk of starting a new brand. Then they just buy out the new brands that are successful. Having a functioning ecosystem of start-ups is seen as good for a large company.
How many small, indie brands that become successful are still indie?
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Perry said:Also, big companies rely on the small startups to take the risk of starting a new brand. Then they just buy out the new brands that are successful. Having a functioning ecosystem of start-ups is seen as good for a large company.
How many small, indie brands that become successful are still indie?
By Chinese investors also, and expect to see more from UAE or Saudi in the next 10 years.
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