February 19, 2021
Have an upcoming launch and wondering if a pre-order campaign is right for your ecommerce business? Whether you’re trying to build buzz for a new product, track demand, or improve cash flow for production, continue reading to determine which pre-order strategy best suits your needs...
Having customers pay upfront immediately increases cash flow and allows businesses to gain the funding and guaranteed revenue they need for production prior to beginning
Pay now pre-order
- A pay now pre-order is a standard purchase with a delayed shipping timeline.
- Many businesses will swap out the “pay now” button for a “pre-order” button and supply information about a potential ship date timeline.
- The pay now ability can be a favorable method for businesses who are planning to release a new product, waiting for a product to come back in stock, or are a new business in the industry.
- Open up an opportunity for shoppers to pre-order a product rather than miss out on a purchase when the item is currently out of stock.
- Can serve as an incentive for customers who pre-order to purchase at a lower price than what the product might sell for when it’s in stock.
- Having customers pay upfront immediately increases cash flow and allows businesses to gain the funding and guaranteed revenue they need for production prior to beginning.
Pay later pre-order
- Similar to pay now pre-orders, the pay later method allows customers to place an order prior to product availability.
- The time frame of when the transaction takes place is up to the business. The business may choose to charge the individual when the product comes back in stock, when the order has been fulfilled, or once it has been shipped.
- This opens up an opportunity to build a meaningful relationship with the consumer. The pay later pre-order method is only successful when there is clear communication between the business and the customer.
- Offers flexibility agreement as both the buyer and the customer can back out of transaction at any time.
- Allows businesses to understand the demand before spending money on production and manufacturing.
- Crowdfunding campaigns are commonly used for startup companies.
- Prior to launching your company or product, supporters pay upfront to help fund a business to meet their starting sales target.
- Once the sales target has been reached, businesses can start production and fulfill orders.
- Crowdfunding is different from the pay now and pay later methods because it is used as a placeholder for an extended period of time of 6 months or more. Pay now and pay later are more commonly used for a shorter production period.
- This method can serve as an opportunity for free marketing. Customers who are backing your product are likely to promote your business out of passion.
If you feel your business will benefit from implementing a pre-order method, take the time to understand which pre-order method is an effective strategy for your business.
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