There are times where running a business isn’t too different from playing a game of chance. After all, you need to make guesses – educated guesses, but guesses all the same – about what kinds of products customers will want and how many customers will want them. With every SKU, you’re placing a big bet on both the number of products you will sell as well as the fervor that surrounds that product.
But what if you didn’t have to? What if there was a way to secure funds ahead of time and get a clear estimate on how popular your products could be?
Enter: the pre-order.
Pre-orders keep control in your hands. They’ll help gather data, bring in funds, and give you a great forecast on how your market is operating. They make it so that in the game of chance that is your business – suddenly, the odds will be a little more in your favor.
Here’s a little more about pre-orders and what they can do for you:
What, specifically, is a pre-order?
In a pre-order, you offer to sell customers a product or collection before it’s ready. In some industries, this could be months ahead of time.
Unlike the typical sales cadence, you won’t be giving customers products upon payment. They’ll be paying and you’ll be sending their product…frankly, whenever it’s ready (please note - you should be giving them a timeframe for when the product(s) will be shipped in your marketing).
Why should I offer a pre-order?
There are a lot of reasons to start adding pre-orders to your marketing strategy:
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They help you learn what works
The research you get from your customers can give you a ton of usable information about how popular your offerings are. Consider a case where you hold a pre-order for a new collection you plan on releasing this summer. If you had to take a guess, you assume 50 of these collections will be sold. So, you hold a pre-order to determine interest.
Now, let’s say you got 100 orders – double your original estimate! Instead of rushing around after the fact to secure, create, and ship products, this would allow you to accurately plan ahead of time and not lose out on the income from those extra 50 units you didn't plan for.
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They help you learn what doesn’t work
Equally valuable (although it may not seem like it at the time) is when you see a decided lack of interest in a product. My husband works with research, and his favorite phrase is “there’s no such thing as bad data!” What he means by this is that there’s still something to learn from an unsuccessful pre-order. Maybe you tried a new color scheme, design strategy, and so on. If you don’t get the numbers you were expecting, you’ve now just crossed something off the list. Now, you know a little more about your consumers.
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They help you plan your finances
Even for pre-orders where things don’t go your way, running a pre-order is a smart financial play. Consider our scenario above: if you were planning to sell 50 units, and instead you only got 5 pre-orders, then you know ahead of time not to order all that inventory. With a traditional sale, that will have meant you invested money into items that don’t happen to be popular in your market.
But with a pre-order, if the items you’re selling aren’t popular for whatever reason – you can simply fulfill the much smaller amount of products or, if you needed to buy in bulk in order to get a good profit margin, you can refund the preorder and forgo ordering that inventory. That’s the worst case scenario. Some customers may be disappointed, but there are plenty of ways to still make it a great customer experience (e.g.: a site-wide discount or some other special exclusive offer should help ease their minds!).
Conversely, if your pre-order is an outstanding success, that’s all the better: you won’t have to invest your own funds on inventory upfront. You can use funds paid for those specific products on those specific products. It’s smart business, period.
This sounds great! So why shouldn’t I offer a pre-order?
Honestly, the only downside is this: you need to space out your pre-sales.
Pre-selling should be reserved for big announcements, huge innovations or tentpole events (like Valentine’s Day, Mother’s Day, etc.) Holding special pre-sales for your most popular SKUs won’t do anything to drum up excitement – they’ll simply create hurdles for your business.
Simply put, pre-orders can be a powerful strategy. Just make sure not to overdo it!
How do I market a pre-sale?
Take a look at this three-step plan:
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Determine the length of your pre-sale
This is tricky: if you don’t allow for enough time, you won’t get an accurate gauge on how popular your product is. Too much time, and you risk waning enthusiasm from early purchasers. Typically, one to two weeks is standard.
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Go all in
Remember how earlier we said that running a business is a game of chance? Well, here’s where you should absolutely go all in. Send reminders every day. Instagram stories. Facebook live. Heck, hit up your local radio station or news team – just get the message out there!
Some advertising studies suggest that it takes around 7 exposures before your message starts to stick. When you think of all the emails, texts, tweets, phone calls, and in-person distractions we all see every day, it makes sense that you’d need to repeat your message so often. And so, we recommend doing exactly that. For the entire pre-sale, you should be absolutely blitzing your messaging.
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Take inspiration from others…like us!
Next week, Oh You’re Lovely is going to be selling pre-orders for our summer seasonal crate. Starting on Monday, take a look at our retail website, our Facebook page, our Facebook group, and our Instagram stories so you can see how we build enthusiasm!
So get out there and start pre-planning your pre-order! We’ll be watching from here, unpacking our own data, and cheering you on as you gather yours. Happy crafting (and selling)!