What to Know about Small Batches and Low MOQs
Arianna Andrews, Chief Commercial Officer
Nov 8, 2021 · 4 min read
Minimum Order Quantities, or MOQs for short, is a term that’s used in the cosmetic industry by Beauty Brands and all kinds of Cosmetic Suppliers – from ingredients and packaging suppliers to manufacturers. The MOQ is the lowest number of units that can be ordered at one time.
Understanding the three major areas where MOQs can impact product development can be the key to a powerful cosmetic development strategy and unlock the playbook for scaling your product for growth after launch.
How MOQs Influence Cosmetics Creation
There are three major areas of cosmetics creation where MOQs come into play:
- Customization: Small orders often offer fewer personalization options.
- Scalability: The fewer units ordered, the more they cost.
- Suppliers: Some suppliers may not be willing to fulfill small orders.
Navigating the pitfalls and risks of MOQs means understanding what you can do at the beginning of your cosmetics creation journey vs. what you can do later, when your beauty product is selling and your brand starts to scale.
Customization is any part of your product that makes it unique. That might be the formula, the packaging, or any phase of the manufacturing process that requires custom design and execution. With more and more brands entering the market every year, companies look to customization as a way to differentiate their products and stand out from the crowd.
Beauty Brands often customize one of or all these parts of a product:
- Primary packaging (like the jar, or the tube, or the bottle)
- Label or printed graphics
- Secondary packaging (like pamphlets, cartons, etc.)
Customizing any one of these areas will mean something different for your MOQs, for your final Cost of Goods (COGs), and for the time it takes you to get to market.
Here are a few ways FORMULA can be customized, and how long it takes to develop these custom formulas:
- You can develop a completely new formula. (6-12 months avg.)
- You can use a base formula and change it to a unique product. (4-10 months avg.)
- You can slightly tweak a ready-made formula, perhaps by adding fragrance or color. (3-6 months avg.)
Each of these options has its benefits and can really help differentiate your product. But the question of which option to choose is largely based on the stage of growth your beauty brand is at. If your brand is new, then tweaking a ready-made formula can be a cost-effective way to do a market test. Small tweaks can usually be done quickly, and—depending on the ingredients—can be an inexpensive way to make a formula unique. Believe it or not, even big cosmetics companies do this when they want to test new products on the market.
When it comes to PACKAGING, materials, colors, and artwork all influence MOQs differently. Let’s look at options for customized primary packaging – jars, bottles, tubes, that first layer of packaging that actually houses the formula. Materials can range from glass, to plastic, or eco plastics, to aluminum, ceramic and paper.
If your plan is to launch a new product with hundreds, not thousands of units, consider these options for saving, yet customizing MOQs:
- Mix and match standard primary packaging and accessories, like screw caps and lids, from different producers’ catalogues to create a unique line up.
- Ask your provider about future inventory and find out what happens if you need the same packaging again, in the same or (hopefully) higher quantities.
- When possible, use the same packaging to make a bigger order, and if you can, create same-size boxes for more than one type of product – for example, the same size and shape of tube for shampoo and conditioner.
- Consider adhesive labels on primary packaging rather than silk-screening at first. If you’re printing boxes, consider generic boxes with labels, or with a paper band, so you can reuse the boxes in the future.
Traditionally in cosmetics development, MOQs for materials and services have been high. But increasingly, Indie Brands and start-ups are demanding to start with smaller order sizes and then scale – meaning to increase incrementally or exponentially – as their sales and market demand grow.
If you’re a new beauty founder, there are so many activities you need to spend time and resources on before launch, that it can be hard to see which costs are important at what time, and how they’ll affect cash flow.
For example, if you get everything customized to the hilt—your formula, packaging, your website, you get certifications, you silkscreen all your bottles, and you translate your labels into 5 languages—your production budget will be super-high, and you’ll have nothing left over for marketing.
Instead, here are some ways to plan ahead for future scalability:
- Leave a little breathing room in your budget for samples, reordering, for front-load buying (say, in the case of packaging), so that your small investments can go a long way to support Sales and Marketing and help you scale after launch.
- If you have your eye on organic or similar certification, create products that are compliant to the certification criteria without actually paying for certification right out the gate. Then pay for certification once you’ve found your sales channel.
- Assemble more than one box design onto a die-cutter — because each die cut has a cost. Later, when you have sales traction and know which products you’ll reproduce, get an individual die-cut matrix for your product’s box.
For building a product with customization and scalability, the third piece of the puzzle is the most critical – finding suppliers that deal in the MOQs that are appropriate for your stage of growth.
When they talk MOQs, brands and suppliers are in a constant dance – that often feels more like a tug-of-war. The brand needs to buy a limited amount of product and the supplier needs to reach a certain threshold in order for the sale to make sense. What a lot of brands don’t realize is that cosmetic suppliers today are faced with much of the same uncertainty around sales and market trends. And that means there may be more flexibility than there once was when it comes to MOQs.
Just as brands look for convincing suppliers – ones that demonstrate competency, transparency, and who seem willing to engage — suppliers are also looking for brands to show up with a compelling business case. If a brand sells itself well with an Ideation Board, a detailed Product Brief, and a Launch Plan, suppliers have more to go on and it’s more likely that a deal can be done.
A common mistake that early-stage beauty brands make is thinking, “Okay, we’re at the beginning of making a product, let’s get a bunch of quotes and decide which suppliers to work with.” They don’t realize that this is the biggest moment of scale they’re facing so far, and they don’t pick suppliers who can be true partners as their brand grows.
So many new Beauty Brands – and established ones – get distracted by product features, marketing needs, and customizing, that they forget to really study the sales channels they plan to launch into. It’s those sales channels that drive product development needs – how much you can and maybe should customize your product; when to purchase what; when to hold back and when to press the gas.
Taking a good look at your sales channel can open your eyes and show you what to look for in suppliers and how to approach them.
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