How do pre-orders work for ecommerce and the best time to accept them

Unless you’ve spent the past two decades living under a rock, odds are you’ve had a company ask you if you wanted to pre-order an item.

Pre-orders are a vital component of a successful new product launch. As we’ve seen over the past few years (particularly in the video game space), pre-orders are a fantastic way to generate hype and buzz prior to the official launch of a product. Beyond that, they’re a great way to get an idea of customer interest levels, and secure early capital.

As proof of this in action, look no further than the PlayStation 5 and Xbox Series X pre-order events. Both gaming consoles were the hottest items of the 2020 holiday season, and pre-orders at retailers in November sold out in minutes. The hype and excitement generated by the pre-order frenzy guaranteed both companies struggled to keep up with demand well into 2021 and even further.

Want to generate that level of excitement for your next product launch? Then let’s discuss how to create a pre-order strategy that works for you.

What is a pre-order?

For the purpose of this article, we’re defining a pre-order as any time you offer an item on your website or in your store that isn’t yet available for sale, but will be at a future date.

By utilizing pre-orders, you allow your customers the opportunity to secure an item ahead of time so they don’t have to worry about it selling out.

But how do pre-orders work?

In most instances, customers will have two options when securing a pre-order:

• They can make a small down payment to reserve the item and pay the balance in full upon release
• They can pay in full upfront

In some instances, the down payment is completely skipped. In an Amazon pre-order, you simply purchase the item like normal by adding it to your cart and checking out, but no charges are applied until the item actually ships from Amazon.

Regardless of how you approach it, utilizing pre-orders allows your customers to avoid the launch day rush to get your new product and it provides them options for how they can pay for that item. It’s a win-win situation.

When should businesses use pre-orders?

Now that we know the basics of pre-ordering, let’s talk about when using the pre-order approach is right for your business.

At this point, you’re probably thinking about what upcoming product releases you have that could benefit from a pre-order program. The key takeaway here is that you DO NOT want to create a pre-order campaign for every single thing you release.

For example, if you’re about to launch a small new product or a slight upgrade to a product you already sell, you’ll most likely want to avoid running a pre-order program for those items.

The goal of a good pre-order campaign is to generate buzz and excitement, so the last thing you want to do is have a release flop. As such, you’ll want to save the pre-order approach for product launches that truly warrant the extra attention.

Beyond that, a great pre-order campaign takes time to build, so you’re best served by taking your time and creating programs for only your biggest offerings.

Here are some examples of when you should consider launching with a pre-order program:

When releasing a new flagship product

Over the past two decades, retailers have come to understand that pre-orders are a vital tool in the successful launch of new products. This is particularly true when launching large flagship products.

A common example of how pre-orders can affect the launch of premium items can be found in the videogame space. Game publishers spend a great deal of time crafting their pre-order campaigns.

This is because day one pre-orders account for over a quarter of the total sales in a campaign. By launching a pre-order campaign, companies make customers aware of the upcoming product, build excitement and buzz around the release, and help ensure their day-one sales numbers are healthy.

This doesn’t just apply to the gaming space. Think about consumer electronics launches (people wait outside the Apple Store every year for the latest iPhone) and even cars like Tesla.

If you have a new product you want to launch with maximum sales velocity, consider crafting an engaging pre-order campaign.

When launching a new brand or business

Of course, you don’t always have to do the pre-order campaign just for a new product. You can use the same principles when launching an entirely new brand or business.

You’ll obviously need a product for people to pre-order, but you’re selling your brand or business as much as a product in this situation.

In the wake of Covid-19, we’ve seen the fashion industry really embrace the idea of brand pre-ordering.

Before the pandemic, fashion ran on a seasonal calendar where products were often overproduced (leading to end-of-season clearance sales). In the wake of Covid, we’ve seen more companies take an approach where they promote new fashion through pre-orders and have placed less emphasis on the traditional fashion calendar.

The benefits of this are that pre-orders allow customers to reconnect with their favorite brands regardless of the season. They can pre-order items ahead of when they’ll actually need them, getting a jump on the season.

It’s even better for businesses, who can gauge the level of interest in their new lines. With pre-orders they can create scarcity and excitement around products, thus increasing sales.

The same principles apply to new businesses too. If you have a new business and a flagship product that defines your company, a pre-order campaign can dramatically impact your company’s launch.

Pre-order campaigns are about generating buzz. That doesn’t mean the buzz has to be relegated to products only, though.

When offering limited-edition versions of products

Building on the scarcity model we mentioned in the last bullet point, offering limited-edition versions of products as pre-orders is a great way to boost sales numbers.

Limited editions stoke our “fear of missing out,” which drives many of us to buy things we might otherwise pass on.

By offering pre-orders for limited edition items, you let your customers secure the rare item without the headache of having to find one on launch day, while also boosting your sales numbers, creating excitement around your product, and making your marketing team’s life easier.

When offering a discount or promotion on an existing product in your line

Most of our previous examples cover how pre-orders can help you launch new products, but you can also harness the power of pre-ordering for items already in your inventory.

The simplest way to do this is by allowing your customers to pre-order items with a discount or promotion component.

In this scenario, you’re allowing your customers to get in early on a promotion or deal (again, stoking their fear of missing out), while helping guarantee you’re moving product and generating sales velocity and excitement.

Don’t think of pre-orders as just tools to launch new products. Use these tools to reinvigorate existing products by offering discounts and promotions.

Pre-ordering pros and cons

While there are a multitude of benefits when it comes to utilizing pre-order programs, that doesn’t mean there aren’t challenges to overcome or that it’s right for every business.

Before we dive into how to structure a pre-order program for maximum benefits, let’s first go through the pros and cons of these offerings so you can determine if this is right for your company.

Pros

1. Guaranteed revenue and sales

Pre-orders are a great way to guarantee a set amount of revenue and sales during the launch window. While you may not know how many pre-orders you’ll get with your offering, as they come in, you can count on all of those sales and revenue for the launch period as customers complete their transactions.

This gives you an idea of not only how a product will perform, but also a good idea of how much product you’ll move and the income it will generate.

2. Provides inventory insights

By this same token, the amount of pre-orders you take in during a pre-launch period gives you an understanding of how much demand there is for your product. This allows you to better forecast the amount of inventory you’ll need to have on hand when you launch.

3. Creates excitement for your new products

Earlier, we discussed how a pre-order campaign can create buzz and excitement for your new products. Video game companies have been taking advantage of this for years, announcing new titles months in advance and offering bonuses for people who order early.

This same principle can apply to your business as well.

Cons

1. Pre-orders can be misleading

Generally speaking, when someone goes to the trouble of pre-ordering an item and either putting down a deposit or paying for it in full, they will complete the transaction.

However, this is not always the case. Because of this, you must be careful when using pre-orders as a predictor of sales. There’s a chance that the number of pre-orders won’t actually correlate to the number of sales.

2. Manufacturers can mess up release windows

If you make your own products entirely in-house, this is less of a potential issue for you. However, if you sell a product that comes from a manufacturer, realize that you are ultimately at the whim of that manufacturer. This means if they miss the release date, it can reflect poorly on your business.

A great example of this was the launch of Sony’s PlayStation 2.

The machine was announced months in advance of its October 2000 launch date and pre-order sales soared. However, Sony came to realize that they couldn’t meet the manufacturing demands and told retailers they’d be greatly reducing their launch shipments.

This resulted in cancelled pre-orders and long lines to buy the limited number of consoles available at stores like Walmart (who didn’t take pre-orders).

The problem was on Sony’s end, but most customers were as angry with retailers who couldn’t fulfill the pre-orders they’d paid for as they were with the electronics giant.

Just remember, this same thing can happen to your business. 

3. A botched campaign can hurt your business

And finally, it’s always wise to remember that a failed campaign can actually do more harm than good.

So, how can a campaign fail? As we mentioned in the previous bullet point, not getting product by the specified launch date can really impact how customers view your business.

This extends to things like overselling the stock you have, to not delivering pre-order bonuses, to just running an underwhelming campaign in general.

The point is that a good pre-order program takes thought and planning. This is not something you can slap together over lunch, put a pre-order button on your eCommerce site, and expect great results.

Plan ahead. A pre-order campaign is a big event. Treat it as such.

How to build a great pre-order strategy

By now, you’ve heard us mention how important a good pre-order campaign is if you hope to find success. But what exactly goes into creating a great pre-order campaign?

Here are some strategies you should be using.

Get your team to buy in

The first step in building a great pre-order strategy involves making sure you’ve not only assembled the right team for the project, but that everyone involved is on-board and on the same page.

Success is often a team effort in business, and the pre-order campaign is no exception. You’ll need marketing, IT, sales, and customer service all working together to create a successful launch.

Treat the project with the importance it deserves by regularly touching base with all stakeholders and making sure everything is on track.

Build a pre-order plan

Launch day is the culmination of all your pre-order efforts, but the most important days in ensuring a successful launch come in the weeks and months leading up to the main event.

As such, consider building a fully fleshed-out pre-order plan that focuses on attainable milestones and features a complete timeline of what needs to happen to guarantee success.

As this article points out, 28% of all pre-orders are placed on the first day of pre-order availability. If you’re slapping a pre-order button on your site six months ahead of launch with the idea you’ll figure out the details as you go, you’re missing out on a lot of sales.

Understanding the pre-order lifecycle will help you better plan your campaign. After that initial buzz, there’s often a dead zone of 7-10 days as the early hype effect wears off.

There will be more spikes in the months ahead as you market your pre-order campaign, as well as another dead zone in the homestretch.

Understanding the ebb and flow of the pre-order cycle is vital to your planning. Knowing where the lulls are will allow you to better schedule marketing so that potential customers remain excited.

The best part of all this planning is that once you have a pre-order plan, you won’t need to build one from scratch for each new product. Instead, you can simplify and modify the master plan to meet the needs of each new launch.

Emphasize scarcity and value

Given a choice, most people will skip a pre-order and just buy the product when it’s available. That’s bad news for your pre-order campaign.

How can we overcome this tendency to wait? By creating scarcity and value.

For an excellent example of how creating scarcity can boost pre-orders dramatically, look no further than Disney.

The company keeps their classic animated films locked away in a vault for long stretches of time, then releases them on home video in limited windows. If you don’t pre-order, you risk missing out on a movie, which may not be available for purchase again for the better part of a decade.

Back in the VHS era, this caused parents to run out and pre-order every Disney release as it was announced. If you missed out you’d not only be looking at a long wait to acquire the film at a store, you might also be forced to pay an exorbitant price on the secondhand market because the films were “rare.”

Creating scarcity, even if it’s only the illusion of scarcity, plays on people’s fear of missing out. Don’t be afraid to use it.

Even if you don’t have a super limited edition product where scarcity can be used to your advantage, you can always lure people in with value.

There are a lot of different ways you can approach providing value. You can offer a discount on pre-orders, provide bonus items, or you can even combine it with scarcity and make pre-order versions of your product limited in some way that the regular retail version isn’t.

No matter what path you choose, the idea here is that people like a good deal and they have a fear of missing out on things. Use those to your advantage and your pre-orders will skyrocket.

Use marketing to create awareness

Marketing will be one of the most important aspects of a successful pre-order event. If people aren’t aware of your launch, how will they know to pre-order?

What kind of things will marketing need to do to ensure the launch isn’t lost in the shuffle of day-to-day life? Here’s a checklist:

• Advertise
• Reach out to existing customers
• Utilize PR and influencer marketing when applicable
• Build content marketing around your campaign

When doing all of the above, you’ll ensure that your pre-order is reaching a targeted audience and increase your chances of success.

Prepare for increased traffic

If everything comes together perfectly, you can expect that your pre-order offer will lead to increased traffic to your business. This could be in-person at retail locations or through your website.

Whichever way it goes, you’ll want to be prepared for this influx of business.  Make sure you have the proper amount of staff in-store to ensure customer service doesn’t falter.

If you’re an online business, you’ll need to be sure your site can handle the increased traffic. The goal here is to plan for success.

Most importantly of all, make sure you have enough inventory on-hand to meet demand. As we’ve mentioned earlier, botching a pre-order launch can have long lasting repercussions with customers.

The launch of a new product is the finish line in your pre-order campaign. Don’t trip in the last stretch before you finish the race.

Ways to increase your pre-order pipeline

In the last section, we briefly touched on the importance of having a pre-order plan for your campaign. In this section, we’ll take a deeper dive into that topic with ideas for how to maximize pre-orders from day one and through the inevitable dead zones most companies encounter.

Before the pre-order

Before you even launch the pre-order initiative, you can lay the groundwork for success by tackling these items:

Start to conceptualize your marketing plan

The importance of good marketing cannot be overstated. Like the pre-order campaign, the marketing plan should be carefully considered early on if you want to truly succeed.

Now is the time to think about content marketing needs, influencers to engage, email blasts, and potential trade shows and other events to attend.

This will all help to build customer awareness.

During pre-order launch

We know from the data above that 28% of pre-order sales happen on the first day of the campaign. But how might we increase this percentage?

With the increased traffic in this stage, this is the perfect time to think about ways to retain these new customers for the long haul. If you’re a web-based business, consider ways to capture email addresses.

If you’re a brick-and-mortar storefront, make sure your staff is upselling other items that would be of interest to customers placing a pre-order.

This is also the time to take your marketing efforts to the next level. If you’re using press releases, get them out into the world. Get your social media team promoting your offering on all the different platforms. Consider your ad strategy and start implementing it.

Finally, make sure you’re re-targeting web customers who bounce from the site without completing a pre-order.

During the dead zone

It’s inevitable that you’ll hit dead zones shortly after your pre-order period begins. These tips will help you get back on track.

Continue marketing efforts

When things slow down, this is the time to rev up your marketing engine. Continue outreach, influencer, and content marketing efforts in order to drive awareness. While pre-orders may plateau for a time, you’ll want to be sure you’re still pushing your offer.

Rely on email marketing

Another way to further raise awareness at this stage is through email marketing. Reach out to customers to make sure they’re aware of the value and scarcity of the product. Remind them that securing a pre-order is the only way to guarantee they can purchase your new product.

Just before release

By this stage, most of the heavy lifting is done, but you’ll want to finish strong. Here’s where to focus your energy:

More email blasts – With your pre-order period coming to a close, this is the perfect time to reach out to potential customers through email for one last time. As before, you’ll want to emphasize the value of pre-ordering and play up the fear of missing out.

Promote scarcity – You’ll want to promote scarcity in your stores and on your website as well. Text or sales pitches that mention the impending end of the pre-order period while advising people to not miss out are extra effective at this juncture.

And with that, you’ll be ready for your pre-order launch to happen. Following these tips will help your campaign run smoothly and increase your chances for success.

Final thoughts

Pre-orders are a great way to launch new or updated products, but a good pre-order campaign doesn’t happen overnight. There’s a lot of planning and implementation that goes into running a successful pre-order program, but by following the steps and advice outlined in this article, you’ll be selling your upcoming products early in no time.

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