Minimum order quantities: how to work with them

Distributors don't set minimums to make your life hard. A minimum order quantity is the smallest amount a supplier will sell or deliver, usually set per item, per case, or per total order. Suppliers use them to cover the cost of picking, packing, and delivering. For a small store, the challenge is meeting minimums without buying more than you can sell or store.

With a bit of planning, minimums become a scheduling question, not a cash problem.

What kinds of minimums will you see?

There are a few common types.

Case minimums. You must buy a full case, not individual units. A case might hold 12, 24, or 48 of an item.

Order value minimums. Your total order must reach a set dollar amount for delivery, or for free delivery.

Item minimums. You must buy a set number of units of a specific product, often for new or specialty items.

Delivery minimums. The distributor only stops at your store if the order meets a threshold.

Each supplier has its own rules. Ask for them in writing when you open an account.

How do minimums affect cash and space?

Buying more than you need ties up cash and fills shelves and back rooms.

Here's a hypothetical. A specialty snack comes in cases of 24. You sell about 6 a week. One case lasts four weeks. If the case costs $36, that's $36 sitting in stock for a month, on one item.

Now say you carry 20 slow items like that. That's $720 in slow-moving stock at any time. It's not a disaster, but it's cash that could be doing more.

Space matters too. A small back room fills up fast with full cases of slow items.

For perishables, the stakes are higher. A case of something with a short date that sells slowly may expire before it's gone.

How can you meet minimums without overbuying?

Several practical approaches.

Consolidate orders. Instead of ordering a little from a supplier every week and struggling to reach the minimum, order every other week and combine your needs. Fewer, larger orders meet minimums more easily.

Use your POS data. Order fast sellers from the supplier with the minimum, and fill slow items elsewhere.

Mix cases, if allowed. Some suppliers let you mix flavors or sizes within a case. Ask.

Split with another store. Some owners who know each other share a case of a slow item. Keep it simple and fair.

Use cash-and-carry for small quantities. Warehouses that let you buy individual cases or smaller packs can fill gaps without a minimum order.

Negotiate. If you're a steady customer, ask whether the minimum can be adjusted. The answer may be no, but asking costs nothing.

A worked example: reaching an order minimum

Here's a hypothetical. A distributor has a $300 minimum for delivery. Your weekly needs from them come to about $180.

Option one: add $120 of extra stock each week to reach $300. That builds up slow stock.

Option two: order every two weeks. Two weeks of needs is about $360, which clears the minimum without extra buying. You'll need a bit more space for two weeks of stock, and a buffer for fast sellers.

Option two usually wins, as long as you have the space and your fast sellers won't run out between deliveries. Use reorder points and safety stock for those.

For store supplies, check order requirements before you need them. Browse the NRS Marketplace and the store supplies category to plan supply orders alongside your product orders. The U.S. Small Business Administration also has resources on managing suppliers and cash flow.