Think back five years. COVID-19 had a ripple effect on the global supply chain, throwing the retail industry into upheaval. Brands pivoted quickly, embracing ecommerce and introducing contactless solutions. During 2020, global ecommerce sales surged by 26.4%, but not because brands were suddenly offering in-store pickup.
It was because they were flexible.
Once again, the retail industry is navigating unprecedented times. Last week, tariffs took effect for about 90 countries, and U.S. shoppers are already starting to see higher prices. Fluctuating tariffs have dominated the news cycle for months and can change again at any moment. Pre-orders provide brands with the flexibility they need to navigate them.
Easy Pre-Order Operations Enable Brands to Keep Selling
If a brand is relocating their warehouse to the United States or moving production from China to Vietnam, pre-orders allow them to sell inventory rather than taking it offline. Pre-orders buy them time to assess the latest developments.
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Pre-orders also give brands flexibility to navigate challenges that are less sweeping but just as inevitable. McKinsey’s annual Global Supply Chain Leader Survey found that 90% of respondents had supply chain challenges in 2024. Sometimes trucks break down or inventory arrives damaged.
Those events won’t upend the retail industry, but they’ll certainly have an avalanche effect. Say an item arrives late. The ecommerce team begins pulling lists of customers to send notifications about the delay. Without easy pre-order operations, this may take days. Alternatively, say only some shipments arrive late. The warehouse continues to receive orders, but without the stock to ship.
As the warehouse descends into chaos, droves of unhappy people call customer service. Others are giving the brand poor customer satisfaction scores and sharing their negative experience on social media.
These customers are gone, likely for good. One bad experience is all it takes for half of customers to abandon a brand, according to Zendesk data. Fashion brand Oh Polly began working with Purple Dot to replace a time-consuming, manual pre-order process. Easy operations helped Oh Polly increase customer satisfaction — and pre-order GMV by 72% year-over-year.
Read on for three ways pre-orders give brands flexibility in any scenario, keeping revenue flowing and customers returning.
1. Never going out of stock.
Every brand has their evergreen products, the staples they’re known for. When they run out, they re-up from the supplier and mark them out of stock on the website. If a customer comes across that out of stock or Notify Me message, they’re likely to check out something comparable from a competitor.
The average retailer has an 8% out of stock rate, which doesn’t sound like much. But it adds up to $1.2 trillion every year. That doesn’t even factor in when brands lose not just the sale, but the customer. If they end up liking the competitor’s product better, the brand may never see them again.
By flipping “out of stock” to “pre-order,” brands can sell from the incoming stock. They can also keep your customer before you’ve had the opportunity to lose them.
2. Extending the selling window.
Traditionally, brands haven’t been able to sell inventory until it’s arrived at the warehouse. That means they can’t start selling the spring line until late February. With pre-orders, they just need the stock to ship — but not to sell.
Pre-orders allow the brand to start selling in January while the inventory is still on the boat. By the time it lands, they have a massive head start. One major benefit of pre-orders that brands often overlook is how much it extends the selling window. The earlier they start to sell, the longer they can sell. The longer they can sell, the more they will sell.
3. Capitalizing on sudden demand.
One of the most popular movies of 2024, Wicked won two Oscars and released collections with dozens of brands, including Cambridge Satchel and Crocs. Brand collabs are incredibly popular — and even more difficult to forecast. That’s doubly true when you consider how anything can go unexpectedly viral on TikTok. If you ask the brand how much they expect to sell, they’ll likely say, “A lot.”
Selling on pre-order allows them to forecast demand much better. That’s because they have valuable data not about what they expect to sell, but what is actually selling. If the item is a hit, great! They can sell until they run out. If it’s not as popular as they hoped, they avoid having a ton of overstock: a $562 billion problem in retail.
The better a brand can forecast demand, the more of it they can convert. I got my first Goorin hat on pre-order. If I saw an out of stock or Notify Me, I never would have bought it. And then I wouldn’t have bought the other seven.
Wrapping Up
In the past five years, there have been two major events that turned the retail industry upside down. Who knows what’s next? All I know is that another event is inevitable.
Whether it’s as overarching as a global pandemic or as ordinary as a strike at the port, easy pre-order operations create the flexibility to successfully weather it.
John Talbott is a Co-founder at Purple Dot, a company with a mission to create a world where everything that gets made gets sold. Prior to becoming a founder, Talbott spent 10 years working in project management at UBS and the London Olympics.
