For brands looking to launch new products, building interest beforehand can often be an incredibly effective strategy. There are several ways to build interest in a new product, including the initial announcement, advertisements, and demos, to name a few.
However, offering a preorder is another excellent method that can help garner interest. In fact, preorders have become a popular offering of many ecommerce brands of all types and sizes.
Let’s take a closer look at preorders and how they can be an effective method for increasing sales and connecting with customers. We will also cover some of the best practices for launching a preorder campaign.
What Does Preorder Mean?
Before we jump in, let’s answer this question for anyone who may be wondering: what does pre order mean?
The simple explanation is that a preorder allows customers to order new products before they are officially released.
Some brands may have the customer pay the full cost upfront while others may accept partial payment until the product is released.
The Preorder Meaning: How Do Preorders Work?
Keep in mind that a preorder doesn’t mean the product is released to the customer early. Regardless of whether or not the brand accepts full or partial payment for a preorder, the product isn’t actually shipped until it’s available.
When a brand does accept a partial payment, they will typically then charge the rest shortly before it releases or the day it ships. Essentially, a preorder is a reservation for a product to guarantee that a customer will get it once it comes out.
The Benefits of Preorders
There are several benefits to preorders, which extend to both the customer and the business itself. These include the following.
- Builds anticipation: One of the most significant benefits of preorders is their ability to build anticipation and interest in a new product. This is especially true when the brand is effectively promoting the product. It helps to get people excited, encouraging them to be one of the first people to buy or receive the product at hand.
- Gauges interest and forecast demand: When launching a new product, there can be a concern about how much inventory to order. If it is too much, the brand may be stuck with storage fees or difficulties. If it is too little, customers may be upset that the product is quickly out of stock. However, preorders help accurately gauge interest and activity in the product to ensure that the right amount of inventory is ordered. This is valuable knowledge in the modern age of ecommerce, as supply chain difficulties down the road can cause significant issues. So, preorders allow brands to easily determine velocity and have an inventory order set well ahead of time.
- Increases sales: Preorders are also an effective method to increase sales for the brand. Firstly, launching a new product in general helps to bring additional revenue to the business. Additionally, it helps the brand to make sales before the product is even ready to be shipped.
As preorders are placed, it can also help to generate interest with others who may then want to preorder as well. Offering payment options like deposits can also help customers who may not be able to pay the full amount up front.
How to Effectively Promote Preorders
A significant factor in launching successful preorder campaigns is promoting beforehand. Here are some steps to help create an effective campaign.
- Preparation: Prepare for the campaign well ahead of time. Ensure the whole team is aware of the campaign and aligned on the plan and goals.
- Realistic timeline: Before starting the campaign, create a realistic timeline from development to launch. This includes lead time for inventory creation, creation of promotional materials, announcing it to customers, and allowing around
4-6 months for customers to place their orders. - Create a promotional campaign: Create promotional materials with
high-quality images or demo videos of the product. Release these across all channels available to the brand, including website, social media networks, email campaigns, and more. This helps to get the word out to everyone in touch with the brand. - Leverage urgency: Urgency is one of the key points of any campaign. The brand wants the customers to feel like they need to order their product as soon as possible. This can be done by announcing inventory levels or limited quantities for launch. Brands can also offer special discounts or bonuses for those who preorder. Depending on the product and cost, brands could even offer a BOGO deal or buy one get one half off.
- Maintain the hype: Once the campaign has begun, keep pushing the word out. Don’t forget to keep customers informed of the number of units left or progress updates on development or launch.
- One last push before release: As the release date approaches, try one last push for additional preorders. This can be done by reinstating an initial deal or letting them know of waning availability.
Ultimately, following the above steps will help to generate significant interest across all channels.
What Pay Method to Use for Preorders
As mentioned above, two types of payment methods are often used for preorders, with these being full or partial payment. Let’s look at the benefits of each of these a little closer.
Full Payment (Pay Now)
- Cash flow: Pay now offers immediate cash flow to help the business.
- Secure the order: With deposits or free reservations, customers will be more likely to cancel their order, which can decrease expected revenue. Pay now allows a business to more accurately predict income from the product.
- Easier inventory tracking: With less expectation of cancellations, businesses can better predict their inventory levels and requirements.
Partial Payment or Free Reservation (Pay Later)
Pay later means the customer can reserve the product with just a deposit or even for free in some cases. They will then have to pay the full amount when the product ships. Benefits of pay later include:
- More orders: Customers who cannot afford the cost upfront may be more likely to preorder as they can save up for when it releases.
- Testing: Paying later can be a good way to gauge interest in uncertain products. A significant number of preorders can indicate that more inventory may be required.
- More flexibility for customers: Customers may not want to pay the full cost upfront if they are uncertain about the product. This gives them time to do a little more research before committing to it when it is released.
Both methods can be effective in a preorder campaign. Typically, the right one depends on the business model and goals.
The Downsides of Preorders
Preordering can be an incredibly effective campaign for boosting sales, generating interest, and launching a new product. However, there are a few downsides to consider before jumping in. These include…
- Dependent on the supplier: Unfortunately, the business is at the mercy of the supplier ensuring production is done on time. This can potentially lead to dissatisfied customers. However, this can often be prevented by placing inventory orders well ahead of time and ensuring supply partners are prepared to handle the order.
- Potential for cancellations: As mentioned above, there is always the possibility of cancellations. Customers may need the money back urgently, choose a different product, or just decide they don’t want it anymore. There typically won’t be very many cancellations, but brands need to always keep this factored in as a possibility.
- Platform dependent: Preorders can only be done across certain platforms. For instance, businesses that sell on Amazon or eBay will be unable to do preorders, unless they offer it on another platform.
- Don’t rely on preorders: Preorders can be an effective method for occasional big product launches, but it should not be the only marketing method for every product. Some products will need to be regular sellers and remain in stock to be promoted.
At the end of the day, preorders are often highly successful, but be sure to consider all factors involved.
Setting Up Preorders the Easy Way with Ecwid
If you want to launch an online store with preorders or need a platform that makes the process easy, Ecwid is your perfect partner. Our selling software makes setting up preorders a breeze
To learn more about setting up preorders in your Ecwid store, click here. Don’t forget to check out the Ecwid Academy to learn everything you need to know about running a successful online store. We wish you the best of success in your future preorder campaigns!
