“The waiting is the hardest part.” While Tom Petty wasn’t thinking about tracking his online order when singing that hard-hitting line, the sentiment still crosses over to e-commerce. After all, anticipation is a powerful tool that can shape the customer experience.
Imagine scrolling through your favorite online store and spotting an amazing gadget, the newest sneaker drop, or maybe a book from your favorite author. Although it’s not out yet, most stores will give a “Preorder now” option.
Preorders are a great way to build excitement, especially among consumers looking forward to securing a new product. They’re also a powerful business strategy that helps companies lock in sales, measure demand, and create massive hype before a product even exists.
So, are you considering using preorders as a business strategy? This guide will explain what it is and how it works to give you better insights. Let’s dive in.
Table of Contents
What does preorder mean?
Why do customers preorder?
Why do businesses love preorders?
Why preorders are a game-changer for businesses
1. You make sales before having inventory
2. Preorders help businesses predict demand instead of guessing
3. Preorders build hype and excitement
Preorder methods: Pay now vs. pay later
Option 1: Pay now (full payment upfront)
Option 2: Pay later (charged at shipment)
Wrapping up
What does preorder mean?
When customers buy something before its official release or restock, that’s a preorder. Many don’t like waiting for their anticipated product to hit stores only to watch it scalped by others. Instead, they’ll reserve their purchase early or pay upfront for a more secure spot later.
It’s similar to calling dibs on a favorite snack—but for products. Once the preorder ends, consumers will get that item when it’s available (new launch or back in stock).
Why do customers preorder?
- Most customers will preorder if they want to be among the first to get a new product.
- Some consumers also don’t like missing out on new arrivals, especially if they’re popular or the stock is limited. So, they’ll preorder instead.
- Customers also preorder to support brands they trust, especially in crowdfunding; preorders help bring products to life.
Why do businesses love preorders?
- Early sales mean guaranteed revenue before a product launches.
- Preorders help predict demand so they don’t overproduce or understock.
- They create hype, as a successful preorder campaign builds anticipation and momentum.
Note: Preorders go beyond an impressive sales tactic. They’re also a smart way to manage inventory and demand.
Why preorders are a game-changer for businesses
1. You make sales before having inventory
A better cash flow is the biggest reason businesses love preorders. Since they’re selling a product before manufacturing or shipping it, companies can capture attention before their loyal consumers can explore other options.
Here’s an interesting fact: shoppers can access almost anything they want today. While this is great, it also means that retailers have a lot of competition. So, unavailable or out-of-stock products could be what chases consumers away.
However, preorders help solve this issue by securing sales and interest before launching or restocking the product. No more turning customers away when they’re ready to buy, even if the item is still in production.
2. Preorders help businesses predict demand instead of guessing
Have you ever noticed how some brands seem to have the perfect stock while others sell out too fast or have too much left? That’s because predicting demand is hard—but preorders make it easier.
Selling physical products is always risky. Businesses must gauge demand accurately, as they always invest in research, design, and production or purchase inventory.
So, if you’re trying to perfect your product before launching it, taking preorders can give you a clear idea of what customers want before production begins. While some business experts rely on instinct (which works well for them), most of us need real data, and preorders provide exactly that. They allow retailers to produce the right amount and ship orders on time.
Example: A fitness brand wants to release a limited-edition running shoe. Instead of making 20,000 pairs, it opens preorders. After 10 days, it receives 14,500 orders and adjusts production accordingly.
Why this matters: Preorders remove the guessing game and let businesses match production to real demand.
3. Preorders build hype and excitement
Glowforge once built massive hype around a product that didn’t exist, resulting in US $28 million in pre-orders. That’s not magic, but the result of a well-planned preorder campaign. Although many ads and screens compete for users’ attention daily and retailers struggle to stand out, preorders are a great way to excite people about new products still in development.
Ready to launch your preorder campaign? Keep the following tips in mind:
- Craft professional product imagery and copy to catch consumers’ attention.
- Promote the pre-order material on paid and organic social media.
- Offer incentives to encourage more consumers to preorder.
However, preorders can do more than just build hype. A good strategy can also increase the chances of loyal customers making repeat purchases. Additionally, preorders can boost a brand’s connection to its audience, showing them that their support is valuable.
Preorder methods: Pay now vs. pay later
Not all preorders are the same. Some businesses require full payment upfront, while others let customers reserve without paying until shipment.
Option 1: Pay now (full payment upfront)
The most common preorder type is “pay now,” where customers pay the full price upfront, just like a regular purchase. The only difference is that they’ll receive the product later instead of immediately. It’s the go-to strategy if businesses want to:
- Set up immediate cash flow.
- Capture customers’ attention.
- Keep customers informed.
- Update out-of-stock products automatically.
Cons
- Some customers may hesitate to pay upfront for something they won’t get immediately.
- Consumers might get frustrated if there are delays.
Option 2: Pay later (charged at shipment)
“Pay later” is the second method that offers way more flexibility. This option lets customers deposit or reserve the item without paying upfront. Then, retailers can charge the full amount when the product is ready to ship. Businesses should use this method if they want to:
- Measure interest in new products.
- Get orders for products without a set release date.
- Charge customers before or after paying suppliers.
Cons
- No guaranteed revenue until the product ships.
- Some customers might cancel before the launch.
Wrapping up
Preorders can be a game-changer if you launch a new product, run an e-commerce business, or offer limited-edition goods. You’ll generate early sales before producing inventory, test demand before investing in mass production, and create hype, urgency, and exclusivity. So, should your business use preorders? If you want higher sales, less risk, and a better product launch strategy, the answer is YES.
