Why Do Shopify Stores Need to Offer Minimum and Maximum Order Quantities
Sep 18, 2023
If you’re reading this article, you may be a Shopify store owner looking to implement minimum and maximum orders on your eCommerce site. But before you actually start placing order limits on your products, let's first review what it is and why it's beneficial for stores of all sizes.
Read on to learn about why minimum and maximum order limits are crucial to running a profitable e-commerce business and how to implement these order limits in your Shopify store.
First Things First: What is Minimum Order Quantity – MOQ?
Minimum order quantity or MOQ is the minimum amount of a product that a merchant allows a customer to buy. Selling a single product to a customer might be profitable for specific products, but for others, there are profit risks involved.
What is the purpose of minimum order quantity? We are so glad you asked! Minimum order quantity helps to ensure that customers are meeting a minimum volume order that can be beneficial for shipping costs, variable costs, and other costs associated in the production and fulfillment of products.
Now, What is Maximum Order Quantity?
Maximum Order Quantity (MOQ) is the maximum number of products in an individual SKU a customer can order at a time. For instance – a merchant sets a maximum limit of 100 items purchased or $600 as the maximum order limit of a product. This means that a shopper can not purchase more than 100 units of the product or they can not order more than $600.
It is a crucial factor in the production and supply chain process, as it helps manufacturers determine the minimum amount of product to produce to satisfy customer demand. The MOQ helps merchants budget their inventory, especially when they are ethically sourcing their production or doing limited product drops.
Importance of Minimum Order Quantity
Now that we understand what minimum order quantities are, we can explore why minimum order quantity is important. Minimum Order Quantity or MOQ allows Shopify stores to get rid of more inventory quickly and increase sales volume. MOQ is also applied to products that could be more expensive to ship, so having a higher volume per order gives merchants more leverage with shipping rates. Other variable factors could include packaging for eCommerce, as well as profit margins, taxes, and other benefits to requiring MOQs.
Applying Minimum Order Quantity restrictions ensures that merchants can better manage inventory and maximize profits.
Managing Inventory & Maximizing Profits
Minimum Order Quantity (MOQ) can move inventory of products that are seasonal or for a particular time sensitive collection during a set period in time. Ensuring that you move the inventory at a profitable pace that sells out the stock can free up capital to use in future drops to keep the demand for products fresh each season or specific time periods. This gives the merchant better profit margins free up capital to invest in regular seasonal drops to keep the inventory moving out.
An example of this is an underwear company with special prints for the Halloween season with 2,000 units in stock. Requiring shoppers to bundle their undies with their family or purchase in a set of 3 minimum per customer, allows the store to move the seasonal inventory quicker before the season is over.
Importance of Maximum Order Quantity
Maximum order quantities are perfect for products that are in high demand with less opportunity to expand stock levels. Setting maximum order quantity restrictions helps stores spread product offerings to more customers with available products.
Maximum order quantity restrictions avoid shortages of inventory on specific SKUs and creates a scarcity mindset with existing customers where they are willing to pay a higher price for those products, and merchants can reach a wider audience by offering the products to more people.
This is a common practice at high-end luxury brands where shoppers can only purchase one Hermès bag per customer as an example. The price per bag is extremely high and it creates demand for products that have a very limited supply. Another well-known example is when Target invites a guest designer to drop a one time only collection where they limit one item of that collection per customer.
Low Inventory Products Warrants Higher Prices with Maximum Order Quantities
Shortage of inventory can be problematic for the customer experience unless it's clear that the product is only available in limited supplies. Some common examples of this are wine bottles with limited vintages or high-end alcohol when only a specific amount of cases are produced per year. Merchants can charge a higher price and limit the amount each customer may purchase.
Applying maximum order quantity restrictions on the products that are high in demand avoids the risks of selling all products to one customer who can resell them for a higher price to someone else.
Another example of this is ethically-sourced and produced clothing. For these companies, their goal is quality over quantity of products sold. They also want to reach as many customers with the products they have in stock at any given time. A bad customer experience and a huge turn off to new customers is when shoppers repeatedly see products out of stock on your product pages. Placing a maximum order limit on these products ensures that you spread out your inventory for longer. In addition, more customers are able to enjoy purchasing the limited stock of these products while you continue to produce more.
How To Apply Minimum and Maximum Order Quantity Restriction On Your Shopify Store
Now that we understand what minimum and maximum order limits are and why they are important, you might be wondering how to set this up on your Shopify store. Well, we're glad you asked!
There are a couple of different options available to Shopify stores:
Install a third-party application from the Shopify app store
Hire a Developer
Install an App
The easier option is to install a third-party app on your Shopify store.
A third-party app like MinMaxify automates the process of setting minimum and maximum order limits on products, groups of products or collections, and shopping cart values. Warning messages appear to your customers while they are shopping in your store. These pop-up messages let them know about the limits and what they can do next to qualify for ordering particular products or placing orders of certain values.
Try it out for free today and start seeing improvements to your eCommerce store's profitability tomorrow.