Nobody wants to miss out on a sale because they don't have a product for order fulfillment (see Order Fulfillment Implications).
If you run a business that regularly struggles with supply levels or well-known stock-outs, pre-orders may be the right choice. It lets you measure consumer demand, inform optimal reorder points, and increase your revenue.
Read on to learn more about reservations, the benefits they can bring to your business, and some best practices.
What Is a Pre-order?
Pre-ordering is the act of purchasing a product that has not yet been released or produced. Pre-orders are a valuable sales tool that allow you to charge customers a deposit or full payment to reserve a product. The best part is, you don't even need to pay for these products to be on hand.
Pre-ordering is also useful for consumers as it guarantees they will receive the product as soon as it is released. If the demand is very high or the production volume is small, it is almost impossible for customers to purchase the product normally.
How Does Pre-order Work?
Pre-ordering is a fairly straightforward process that involves selling products your business doesn't own. It's similar to dropshipping, but in a more limited way.
On the commercial side, the first step to pre-ordering is signing a contract with your supplier that guarantees you a certain amount of product on launch day. Next, you need to create a web page for these products so you can sell them. You can then use ecommerce marketing to notify customers of limited stock and direct them to the site. Finally, when the products arrive, your order fulfillment team will immediately pack them and ship them to the customer.
For customers, pre-ordering is as simple as a normal purchase. Many merchants only take a deposit for the reservation, but some may require full payment. Customers will receive an estimated arrival date, usually on or near the same day the product is released. Then they wait for delivery.
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