Small BusinessCommerceE-commerce

Pre-orders: How they work and everything you need to know

Whether you’re looking to create buzz, drive sales, or cultivate customer loyalty — or a mix of all three — pre-orders can be a powerful tool for businesses, revolutionizing how merchants interact with customers.

This sales strategy lets eager shoppers secure their favorite products before they hit the shelves, fostering anticipation and exclusivity. For merchants, this strategic approach can help measure market demand, minimize inventory risks, and boost cash flow.

In this guide, learn the basics of pre-orders, how to run a successful pre-order campaign, and why this approach can be a game-changer for e-commerce businesses.

What does pre-order mean?

Pre-order refers to a sales strategy where customers can purchase products before they are officially released or become available for general sale.

In other words, it allows customers to secure and reserve their desired items in advance, even if the products are not yet in stock or ready for immediate delivery.

The result for merchants? Pre-orders can help build excitement, secure sales before a product's release, and provide valuable data for inventory planning.

How do pre-orders work?

When a product is available for pre-order, customers can place their orders and make payments in advance, ensuring they will be among the first to receive the item once it becomes available.

Here are some of the general steps of a pre-order campaign:

  • Announce and promote the product: Provide details about the product launch — including features, pricing, and release date — through social media, email newsletters, or dedicated landing pages.
  • Open the pre-order window: Create a specific pre-order sales window where customers can place their orders. For instance, a period of two weeks during the month of November. Continue to create buzz and build anticipation by promoting the product’s features and benefits through various marketing channels.
  • Don’t forget the FOMO: Create a sense of urgency to encourage customers to place an order instead of waiting for launch day.
  • Offer pre-order incentives: Merchants can offer incentives to encourage pre-orders and boost sales, such as discounts, exclusive bonuses, or limited-edition packaging.
  • Provide order confirmation: Once a customer places a pre-order, they should receive an order confirmation and an estimated shipping or release date, if available.
  • Handle payment: Upon pre-order placement, the customer's payment method can be charged (like any other sale). However, some merchants may choose to simply authorize the payment method to ensure the availability of funds, with the actual payment charged when the product is ready to be shipped or delivered.
  • Manage inventory: Merchants can use pre-order data to manage inventory levels, ensuring they have enough stock to fulfill all pre-orders along with extra units for general sales.
  • Release the product: Typically, merchants work to deliver pre-ordered items to customers ahead of or by the product’s official release date. Keep in mind that if a merchant sends a pre-ordered item on the release date, it may result in a delay in receiving the product.

Potential pros and cons of pre-orders

Read on to learn the potential advantages and drawbacks to a pre-order sales strategy.

Pros of offering pre-orders

Here are some of the possible benefits you may experience during a pre-order campaign.

  • Boost excitement and generate brand awareness: Pre-orders can help generate excitement and anticipation among returning and potential customers. They can also create buzz and drive interest in not only the upcoming product but also the brand overall.
  • Build customer relationships: Pre-orders can create an opportunity for businesses to engage with their audience early on. They can gather feedback, answer questions, and build relationships with customers, fostering a sense of loyalty.
  • Increase cash flow: Pre-orders may allow businesses to generate revenue before the official release of a product or service. This early influx of funds can help cover production costs, marketing expenses, and more.

Cons of offering pre-orders

On the other hand, there are some downsides to pre-orders. Here are a few examples:

  • Supply chain disruptions: Unexpected production or supply chain delays can lead to delayed fulfillment and customer frustration.
  • Overpromising and under-delivering: If a business overestimates its capacity to fulfill pre-orders or sets unrealistic release dates, it may struggle to meet customer expectations.
  • Cancellation and refund requests: Some customers may change their minds, leading to pre-order cancellations and refund requests. Managing these can be time-consuming and affect cash flow. However, remember that this can occur on any item, not just a pre-order.
  • Cash flow management: While pre-orders can generate revenue before the official release, companies may still need to balance the funds received from pre-orders with ongoing expenses and production costs.

How to run a pre-order campaign for a product?

In addition to the steps detailed above, here are some other factors to consider before running a pre-order campaign.

  1. Define the pre-order method

    There are generally two main ways businesses can offer payment for pre-orders:

    • Pay now: Customers pay the full amount at the time of placing the pre-order, even though the order won’t be fulfilled immediately.
    • Pay later: Customers reserve the product without immediate payment, which may attract more buyers but pose a risk of cancellations.

    In either method, it’s important for businesses to carefully manage cash flow to account for expenses in production, operations, and potential disruptions and cancellations.

  2. Set up your customer target base

    Targeting your audience in a pre-order campaign is key. By focusing on the right demographics, interests, and preferences, businesses can create compelling and relevant messaging that resonates with customers — which may lead to better engagement and conversion rates.

  3. Plan a pre-order marketing strategy

    A pre-order campaign is only as effective as its marketing strategy. After all, how will shoppers discover the campaign without a strong pre-order marketing strategy?

    Here are some tactics to consider in your next pre-order marketing campaign:

    • Early access and limited offers: Create urgency by offering exclusive discounts or bonuses for customers who pre-order within a specified time frame.
    • Influencer collaborations and discounts: Partner with relevant influencers or industry experts to promote the product or service to their followers and provide a pre-order discount code.
    • Social media and email campaigns: Use social media teasers and email marketing to reach existing and potential customers. Create teasers, sneak peeks, and behind-the-scenes content to build excitement.
    • Referral programs: Encourage pre-order customers to refer friends and family with incentives, expanding the campaign's reach.
    • Landing pages: Create dedicated landing pages with compelling visuals, product details, and a clear call-to-action for pre-ordering.

    Remember: Meet your audience where they are. Social platforms like Facebook, Instagram, Twitter, LinkedIn, and Reddit can be powerful for reaching a wide audience — but it may be difficult to engage on all of them. Instead, pick the relevant ones for your target demographic and start there.

  4. Enable your website for pre-ordering

    Before kicking off a pre-order campaign, make sure your website is equipped. Here are some quick tips to help get started:

    • Design a dedicated landing page to showcase the pre-order campaign.
    • Create a user-friendly pre-order form, integrating a secure payment gateway to process payments.
    • Communicate transparently about terms, delivery dates, and refund policies.
  5. Announce the pre-order campaign

    A well-executed announcement can help build anticipation, attract early customers, and set the stage for a successful launch.

    To help make your pre-order campaign a success, focus on creating as much excitement as possible. You can:

    • Utilize countdown timers, social media teasers, influencer collaborations, and email marketing.
    • Use eye-catching visuals, such as high-quality images, graphics, or videos, to showcase the product and capture the audience's attention.
    • Provide early access to loyal customers.
    • Offer giveaways or contests.
    • Host live-stream product demos.

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