Tales Of A Fourth Generation Textile Executive: Minimum Order Quantities Discussed

Good Day Studioe Fans,

I wanted to take a moment to enlighten you about our minimum order requirements for our companies and discuss why we have them. For Studioe, the minimum order quantity is 5 bolts per shipment. On reorders, the minimum is 3 bolts. Our other quilt shop only companies, the Blank Quilting Corp. and Henry Glass have the same minimum requirements. As for A.E. Nathan, there is a 6 bolt minimum order. Just like our quilt shop customers, we too have minimum order requirements set by all of the different fabric mills that we do business with when we place our fabric orders. These minimums are in the 1000’s and by meeting these minimums, we show the fabric plants that we are serious about business and we are a viable customer.

Why do we have minimums for our quilt shop customers? What you need to understand is that we are trying to run a business that serves serious customers who are active and have no problem meeting the minimum order requirements. In addition, we are in business to make a profit….like most businesses.

A better way to explain why we have the minimum order requirement would be to take the example of a customer that wants to order one bolt of fabric i.e. 15 yards. This ends up being a sale under $100, but for this example, let’s just say it costs $100. We obviously aren’t making the full $100 as there is a cost to actually produce the fabric. So let’s say that $50 of that purchase is profit and the other $50 is actual cost to produce and manufacture the actual fabric. Now listen while I make that $50 disappear like a magician and you can see there is no profit and perhaps even a loss on such a small order. The truth is that even an order that just meets our minimum is probably not very profitable and may be a break-even. Here is a list of all the items that help to reduce that profit to nothing:

We have to pay our sales rep a commission. Let’s just say it is 10%. So on the overall $100, that is $10. On the $50 mark up, that is $5.
The reps usually fax the orders to me or one of my associates. We take the time to review the order and make sure everything makes sense. That comes out of someone’s time and it does cost something based on the person’s salary. It might not be much, but we are only working with $50 of potential profit.
Then we have to credit check the order to make sure the customer is a worthwhile credit risk. Once again, this does cost more based on the person’s salary.
Then our order entry person has to enter the order. He/she also makes a salary.
Then we have to send the order to the plant and someone has to pull the actual order for shipping. There is a cost involved with this too.
Finally, we have to bill out the order and this may even require a stamp and envelope to bill the customer. These are actual costs….small, but actual and they add up.
As for the customer, the cost to ship 1 or 2 bolts is quite a lot and ends up increasing the price of that bolt dramatically, thus reducing the margin for the quilt shop.

I think this pretty much sums up the point of the minimum order requirement. We aren’t enforcing these rules to be difficult, but seriously, if you aren’t able to meet our minimum order requirements, you should consider working with one of our distributors who is more willing to take on these smaller orders. We are not trying to turn anyone off by enforcing the rules and that is why I am explaining this so people can understand where we come from with these concepts. I hope this clears things up. Thanks for listening.

Stay Warm & Be Safe, we have a big storm heading our way!

Stickler Scott