Website on Demand

Offering Pre-Orders to Bypass Supply Chain Hurdles

6 minutes read

When customers have numerous retail options, you may wonder why they’d bother paying upfront and waiting for an item—especially when they can find it elsewhere.

There are two primary reasons customers enjoy a pre-order option: they prefer to purchase from customers they trust, and the COVID-19 pandemic has caused supply chain issues worldwide. As a result, companies with pre-order options on their websites continue to enjoy significant advantages.

Still, taking preorders doesn’t come without risks; canceled preorders, late delivery, and poor communication can damage your brand. However, a well-executed pre-order strategy grows customer retention, builds brand loyalty, and gives customers more options.

First, let’s take a deeper look at what a pre-order strategy is:

What Is a Pre-Order Strategy?

A pre-order strategy is an inventory management strategy whereby customers can place orders for items that aren’t in stock at the time*.* When the customer preorders a product—they will be first in line to receive it once it arrives in stock. However, depending on the supplier, this may take days, weeks, or months.

Having tonnes of preorder items is an evident sign that customer demand outweighs supply. However, you can stop your customers from missing out while maintaining excellent sales and offering top-class customer service by offering a preorder service.

In addition, you must detail the correct delivery time to ensure a successful pre-order strategy. Suppliers can be unpredictable—especially during challenging economic times—but it’s better to overestimate than underestimate delivery times on your eCommerce platform. Thankfully, a preorder strategy is excellent for working through supply chain issues.

Why COVID-19 Supply Chain Issues Made Companies Use Pre-Order Strategies

The COVID-19 pandemic battered global supply chains. Statistics suggest that 19.9% of businesses reported supply chain issues in 2020, which resulted in canceled orders and enormous production and delivery delays.

However, many companies saw the global supply chain issues as an opportunity to adopt a pre-order strategy. Instead of disappointing customers, companies created pre-order strategies to build product hype, manage their inventory, and work around supply issues.

The results have been fantastic. As a result, many companies are maintaining their pre-order strategies as the COVID-19 pandemic ends.

Why Do Pre-Orders Happen?

predorder button

1. The Product Has a Higher Demand Than Expected

It may be tricky to predict a product’s performance on an eCommerce platform. There’s a small line between not ordering enough products and ordering too many. Either way, this could be damaging to your brand.

Nevertheless, if your brand has a robust relationship with your suppliers, they may order less inventory and accept preorders to meet demand if the product grows in popularity, which can keep your customers happy.

2. Global Supply Chain Problems

The COVID-19 pandemic caused supply chain issues; that’s why many companies have started preorder strategies.

However, many factors may cause supply chain issues—including an influencer promoting your product or a blog listing your product. In addition, poor weather and changing fashion trends can cause supply chain issues.

3. To Create Hype for a New Product Launch From Your Collection

It’s crucial to build hype before a new product launch, so many companies adopt a preorder campaign to increase publicity. However, you can take it a step further by offering a limited preorder supply for your buyers.

For example, you could offer 1000 preorder spots on a first-come, first-serve basis. Subsequently, customers feel your product is something special—which builds tremendous hype. Your customers will also believe your products are in-demand.

The Benefits of a Pre-Order Strategy

1. You Can Bypass Supply Chain Hurdles

A preorder strategy helps bypass supply chain hurdles because your customers are waiting for products instead of expecting them quickly. You’re likely to lose customers when you promise a customer a quick delivery and suppliers let you down.

However, you can bypass any supply chain risks during unpredictable times with a pre-order system. It’s also an excellent option if you have new suppliers.

2. It Provides an Additional Revenue Stream

If you list your item as sold out, customers will look elsewhere for the same product, even if they love your brand. Inevitably, you lose revenue, frustrate the customer, and potentially lose the customer to another brand. All three outcomes are unwanted, but the latter is disastrous.

But that’s where a pre-order system can save you. An excellent pre-order system allows you to clinch the sale when the customer is ready to purchase. There’s a significant chance the customer won’t return if you list the item as out of stock.

Loyal customers don’t mind waiting for products if they’re fans of your brand. If they see a pre-order option, they’re more often happy to wait for the product.

3. You Can Use Scarcity Marketing Tactics

Customers are more likely to purchase if they feel like they will miss out on something popular and unique. Scarcity is a marketing tactic whereby the company stocks a limited number of products to grow demand. It works by targeting the customer’s primal instincts.

If something is harder to access, the greater the product becomes. As a result, preorder products often become more desirable to customers. In addition, a third-party Shopify app can add exciting preorder buttons on the product image to entice the customer even more.

predorder button

4. You Can Predict Your Revenue Streams and Sample Demand

Predicting your revenue streams is significant when you’re growing a business. If you’re pitching for investment, investors prefer robust financial projections. In addition, there’s nothing worse than miscalculating the demand for your products; unsold stock causes money problems and frustrates your suppliers.

However, you can predict your revenue streams with a preorder strategy because you’ll always have enough products to meet a customer’s demand. In addition, your suppliers won’t need to worry about unsold stock.

Potential Disadvantages of a Pre-Order Strategy

It’s essential to know the disadvantages of any strategy before going ahead. Although a preorder strategy has many benefits, here are some possible downsides:

  1. You’re relying heavily on suppliers: If you have excellent suppliers, you may feel confident about relying on them to deliver the products on time. However, you could face significant problems if your supplier ever lets you down. Your supplier must be reliable at all times.
  2. You can’t work on eBay or Amazon: If you run your eCommerce platform through eBay or Amazon, you can’t use a preorder strategy because these companies have strict shipping requirements.

Stores Using a Pre-Order Strategy

The Best Way To Use a Pre-Order Strategy

A pre-order strategy has become essential for many companies in recent years. Now you understand the importance of a pre-order strategy—what’s the best way to use one? Using a third-party Shopify app on Shopify stores is an excellent way to start.

A preorder application will offer:

  1. Back-in-stock email notifications: Sending back-in-stock email notifications is excellent for customer retention.
  2. Preorder discounts: Customers love automatic discounts when they preorder products.
  3. Partial payments: Customers love the option of partially paying for an item when they preorder and then the rest when you’ve shipped the item.
  4. Installation support: Installation support will ensure the preorder option looks superb with your current website theme.
  5. Stylish badges: Stylish preorder badges over product images and collection pages are brilliant for sales conversion.
  6. Mixed-cart alerts: Let your customers know if they have a mixture of preorder items and non-preorder items in the shopping cart.

In Summary

The COVID-19 pandemic changed how eCommerce works. Most major brands now use preorder options to boost their revenue, keep customers happy, and prevent them from losing customers to other brands. A preorder strategy can also help companies work through any supply chain issues.

You can enjoy the same benefits if you have a preorder option on your website.

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