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What are pre-orders and how do they work in eCommerce

what are pre orders, in ecommerce

As an ecommerce business owner when demand exceeds supply, pre-orders are the way to go.

Pre-ordering offers a whole new way of marketing your products, gauging excitement, and making decisions around restocking or manufacturing products. Of course, a pre-order strategy needs to be done tastefully. The last thing you want to do is scare off customers by having too many out-of-stock items on your ecommerce website.

Between knowing when to add a pre-order button to your store, prepping your inventory flows, and picking manufacturers to work with—there’s a lot to consider before you pull the trigger on this type of strategy. Keep reading for tips on how to offer pre-orders and make this strategy work for your business.

What is an eCommerce pre-order?

An e commerce pre-order is when an online store puts an item up for sale when it’s not currently in stock. Pre-ordered products can be purchased and paid for in advance, and typically have an availability date attached to them. Or, shoppers may be billed when the item is shipped.

Why should you allow pre-ordering?

You might consider a pre-ordering strategy for your ecommerce business for several reasons:

  • To market a new product before it's released. For example, many book or video game publishers run pre-sale campaigns to create buzz around new titles. This helps to create a sense of urgency among buyers who want to be the first to receive new items. Pre-order campaigns can be timed to coincide with dates or events (e.g., pre-order in time for spring), and can become the focal point of marketing campaigns.

  • To retain customers (enable backorders).  If you have a trending product that goes out of stock quickly, pre-orders can help you to retain the sale even when inventory drops to zero. To spice up your offer, you could even guarantee special pricing for shoppers who take advantage of pre-order offers. Pre-orders additionally help to reduce wait times for high-demand products, ensuring that your customer will receive an item as soon as it becomes available and doesn’t have to check back into your site to place an order.

  • To fund products in development. Crowdfunding platforms like Kickstarter connect creators with individuals who are willing to pledge money towards their ideas. Backers can, in turn, look forward to receiving the product as soon as it’s developed. Similarly, you may lean on a pre-order strategy if you’re looking to validate a new product idea or to test new product variations (e.g., colors, sizes, scents) prior to committing fully to a new product line.

  • To help with cash flow. The typical manufacturing process takes anywhere between 30 to 60 days. During this time, you’re likely communicating with multiple suppliers, receiving samples (in the case of a new product), and preparing orders for shipping. To keep money coming in as you’re burning through cash and time, you may choose to accept pre-orders on your items.

  • To sample demand. Pre-orders provide two key benefits to store owners who must plan for purchases ahead of each season. First, they help you understand the demand for a given product. Are bento lunch boxes going to be the hot item for this school season or are eco-friendly bamboo lunch bags a better investment? Pre-orders also provide a reliable source of sales revenue. These two benefits work together to help online store owners plan and fund their purchases simultaneously.

When is the right time to offer pre-orders?

You could offer pre-orders at any stage of your business’s growth. From the time you offer your first items, to the time you expand to new channels and countries, pre-orders can keep sales coming through the door.

Here are a few examples of when you may choose to launch a pre-ordering button.

  • When offering a new product on your website. If you’re rolling out a new product, pre-orders can help you gauge interest, generate income while the product is in production, and inform your website visitors about the item’s pending availability. Keep in mind that you’ll need to find a reliable manufacturer for your product idea—one that delivers on quality, timing, and communication. You have customers waiting for their items and your reputation depends on delivering the goods in a reasonable time. Be sure to also promote your new products with attractive eCommerce merchandising methods.

  • When offering VIP customers first access to limited-edition products. You can allow your top customers to call dibs on new or high-demand items before they’re released to the public. This is a great way to foster brand loyalty and to incentivize shoppers to join your email list or loyalty program. It also gives you the opportunity to promote popular products in advance, while helping you plan for how much of the item to order.

  • When combining pre-orders with discounts or promotions. Offering pre-orders in combination with promotions and price discounts can help to motivate buyers to take action, even when your product is out of stock. This approach works particularly well when tied to an event, holiday, or season and can be communicated via your website, social media accounts, email, and ad campaigns. Read more: Discount pricing strategies

  • When testing a new product. Test a product’s viability before committing your resources to a full product launch. You could launch a “coming soon” landing page to sample interest, and to slowly roll out your products. You can—in a sense—buy time to address any supply chain issues (which are inherent to any new product release) and/or set realistic expectations with customers prior to fully rolling out your product.

when to offer pre orders

A few cautionary tips when using pre orders

A note of caution—it’s not advisable to offer pre-ordering when the availability date of an item is extremely uncertain or unknown. In this case, an alternative to pre-orders could be to enable shoppers to sign up for an email or text alert that notifies them when the item is back in stock.

Furthermore, when implementing pre-orders on your website, it’s important to clearly communicate the entire process to your customers. This includes notifying existing customers when pre-orders are available and the status of your products after they purchase your products. Some important details you’ll want to communicate with your buyers:

  • Estimated shipping date

  • Their payment options (covered in the next section)

  • Terms and conditions associated with pre-orders

  • Order cancellation policy, complete with an easy way for customers to cancel pre-orders if necessary

Choosing the right eCommerce pre-order method

When offering pre-orders on your website, there are several payment schedules that you can offer.

  • Pay now: This method requires payment at the time of purchase, but shipping is deferred until the product becomes available. This is the most popular type of pre-order for obvious reasons—it enables store owners to earn revenue before the item is available to be shipped. It’s also easy to set up if you already have an online payment solution set up. However, if you sell internationally, you’ll want to check for any red tape regarding payments. Some countries forbid the sale of out-of-stock items, so you’d have to default to “pay later” in these instances.

  • Pay later: In this scenario, the customer promises to pay for your product at the time of shipping. Both the buyer and seller can typically cancel a “pay later” order if desired, so you’ll have to plan for excess inventory if there are a lot of cancellations.

  • Crowdfunding: Crowdfunding is a popular option if your business is creating a new product and requires capital for the manufacturing process. Customers often commit to sending you money even if a product isn’t guaranteed, and look towards receiving rewards, equity, or the final product (if and when it’s built) in return. This approach isn’t standard for the typical eCommerce types of businesses.

Benefits of using pre-orders for your eCommerce business

Pre-orders can be an effective strategy for your eCommerce business and for several reasons. We've put together some of the main ones, to help you understand if they're a good strategy for your business.

  • Better cash flow management: Pre-orders can improve your cash flow by securing upfront revenue on the promise of goods being shipped once they're available. This can be helpful in managing production costs and other operational expenses. Just be sure to manage your pre-order and inventory effectively so customer do get what they ordered.

  • Demand insights: By offering products for pre-order, you can gauge customer interest and forecast demand accurately. This can help avoid overproduction or stockouts.

  • Build anticipation: Pre-orders can create a sense of anticipation and excitement about your product among your customers, which is a good promotion in itself. You can also use it in your marketing, to build excitement and potential new orders. If pre-orders are combined with a sense of limited availability, they can create a sense of urgency among customers and speed up the buying decision process.

  • Customer loyalty: Customers who pre-order products are likely to be your most loyal ones. They trust your brand enough to commit to buying a product before it's even available. These are then customers who should be segmented and wooed with different promotions throughout the year.

  • Delivery flexibility: For items that aren’t needed immediately (like books, non-seasonal clothing), pre-orders allow you as the retailer to better plan your delivery schedules and manage your inventory more effectively.

How do pre-orders work with Wix eCommerce?

Wix's eCommerce platform offers a native solution for accepting pre-orders or backorders on your products.

  1. Click a product to edit from your Wix eCommerce dashboard.

  2. Click the Pre-order toggle to display a pre-order button on your listing. This button will appear whenever inventory reaches zero for your active product listing.

  3. Customize your pre-order message, i.e., the short blurb that customers will see when your item is out of stock. As an example, you could provide an estimated date for when your product will be back in stock.

  4. (Optional) Limit how many pre-orders a single customer can request of your item.

Note: Any pre-orders made through Wix eCommerce will require immediate payment.

When you receive a pre-order, make sure to follow up with a thank you email that reiterates that this is a pre-order purchase. Communicate as much information as possible and follow up regularly to keep your customers at ease.

You can integrate your favorite email marketing app with Wix, keeping customer info, order status, and inventory data in sync. Using the Wix editor, you can also spin up “coming soon” pages or bespoke product pages to further incentivize purchases.

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