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Pre Order Meaning: What Does Pre Order Mean?

By
Joshua Weatherwax
Table of Contents

Nobody wants to miss out on a sale because they don't have the products for order fulfillment.

If you run a business that regularly runs into issues with supply levels or backordered products, pre ordering might be the right choice. It lets you gauge consumer demand, inform optimal reorder points, and increase your revenue.

Read on to learn more about pre orders, the benefits they can bring your business, and some best practices.

Pre Order Definition: What Is Pre Order?

A pre order, or preorder, is the act of purchasing a product that has not yet been released or produced. Pre ordering is a valuable sales tool that lets you charge customers a deposit or full payment to reserve products. The best part is that you don't even have to pay to keep these products on hand.

Pre ordering is also useful for consumers as it guarantees they'll immediately receive a product upon release. If demand is very high or production runs are small, it can be nearly impossible for customers to buy the products normally.

Benefits of Pre Ordering

There are many benefits associated with pre ordering, both for the business and the consumer. An effective pre order strategy can help build excitement about upcoming product releases.Here are three benefits of pre ordering:

Increase Sales

The major draw of using a pre ordering strategy is that it allows you to increase eCommerce sales. You can expand your product offerings without investing heavily in inventory. You can also pair this with research into your customers and their wants. This lets you quickly find the best products to offer to maximize revenue and build brand awareness. It's an easy incentive to draw in customers and you can use eCommerce email marketing to get the word out.

For food suppliers, BlueCart eCommerce is a great tool for this. This all-in-one solution handles online store design and structure, menus, payment processing, and more. It also has an integrated email marketing function that lets you send promotional emails directly to your customers.

Predict Product Demand

Another way to use pre ordering is to gauge customer interest in a particular product. Instead of ordering a large quantity of products that eventually become dead stock, you can offer a limited pre order. Then, if customers don't seem interested, you don't waste money on buying up a lot of safety stock.

You can also discover a much higher interest in products than planned. Pre orders let you get revenue while the products are on backorder (see backorder meaning). This will also help you calculate the optimal reorder point going forward.

Improve SEO

Preorder pages on your website can go a long way to increase your search engine traffic. This is because you can start ranking for terms related to the product before it's even released. By the time the product comes out, you'll have a leg up on your competitors who just created their product pages. 

That being said, this is only true if you use proper eCommerce SEO techniques on your site. Take the time to do your research and build the pages with on page SEO for eCommerce in mind. There’s also specific ways to structure your product pages to optimize SEO for eCommerce product pages. Pay attention to the best practices and you’ll sell out in no time.

Disadvantages of Pre Ordering

Unfortunately, pre ordering can also have detrimental effects if you don't do it properly. These are the two biggest disadvantages of pre ordering:

Limited Production

Product scarcity and pre ordering commonly go hand-in-hand. This means you have a very short window to purchase the products you need and the competition is stiff. If you advertise products too soon or are reliant on pre orders, you can run into issues that hurt your bottom line.

Reliant on the Manufacturer

Unlike inventory that you keep in your own warehouse, you don't have control over your pre ordered products. If there are production issues, an increase in lead time, or another issue you don't have much recourse. This can be made even worse if your supplier isn't great at communication. Stick to suppliers you trust and have a good relationship with.

Preorder Or Pre Order?

Both preorder, pre order, pre-order are all acceptable ways to refer to the practice. The differences may be highly related to where you're from and how you're using it.

The Oxford English Dictionary uses the term with a hyphen while Merriam-Webster and the AP Style guide prefer it as a single word. To back their stance, per Google search trends, preorder is the most common spelling. Pre order with no hyphen is a variant mostly reserved for web use where hyphens can be misconstrued as part of a URL string.

How Does Pre Order Work?

Pre ordering is a fairly simple process that involves selling products that your business does not own. It is similar to dropshipping, but in a much more limited way.

On the business side, the first step to pre ordering is to sign a contract with your suppliers that guarantees you a certain number of products on release day. Next, you'll need to build a web page for the products so you can sell them. Then, you can use eCommerce marketing to inform customers of the limited stock and drive them to the site. Finally, when the products arrive, your order fulfillment team will package them immediately and ship them to the customer.

For customers, placing a pre order is as simple as making a normal purchase. Many businesses will only charge a deposit fee for pre orders, but some may require payment in full. The customer will receive an estimated date of arrival, usually the same day as the product release or close to it. Then they wait until delivery.

Pre Order in the Court!

Selling products on pre order is a great way to grow demand and increase sales. You can also avoid running into costly issues with excess inventory. It's a great tool to use to grow your revenue and build relationships with your suppliers.