THE VALUE OF PRE-ORDERS

THE VALUE OF PRE-ORDERS

Knowing what to produce, when to produce it, and how much to produce is one of the biggest challenges as a growing product based company. Production takes time, money, intention and a lot of luck. Produce a product that is a flop, and you just wasted a bunch of your team’s resources on something that doesn’t excite your customers or drive the needle forward. Produce too little of a product that is a hit you risk frustrating your customers and missing out on potential large revenues which can fuel growth. 

As you grow your business, over time, you will learn what sells, what doesn’t sell, when sales are good, when they aren’t and a general idea of how much of a certain product to manufacture and put out into the marketplace. Having a small but deep inventory of core items or ‘Never Out of Stock’ (NOS) items can help maintain even cash flows and predictable growth. What if you want to try something new to test out a crazy new idea or product? It can be an enormous risk to try something new and not be sure if it will hit the mark or not. Sometimes it’s good to take risks as a small business, but sometimes it’s better to take as much risk out of a new direction, decision or product as possible. 

One way we like to test out a new garment or partnership is with a PRE-ORDER campaign. Sometimes referred to as a PRE-SALE campaign as well, the idea behind it is that you can put the product on sale BEFORE you even take it into production or manufacture it. There are a lot of benefits to a program like this for small businesses and the community. Typically, you have a PRE-ORDER period, usually around 1-3 weeks, where you invite your customers to buy the product before it’s made. Then after that PRE-ORDER period is over, you put it into production, rather than the traditional method of producing a product, then selling it and waiting to see if customers want to buy it or not. 

There is little to no risk when running a program like this because you aren’t spending capital upfront invested in the product before you take in the revenue. It’s like how websites like Kickstarter or Indiegogo operate, but on a smaller scale and within a pre-existing business model. You can gather initial sales data from your customers who support and purchase the PRE-ORDER, and when you go to manufacture, you can base your production of this data. Maybe you sell more Smalls than XLs, or maybe you sell more T-shirts than Hats. Maybe there are more females purchasing the product than you thought or maybe most of your sales are coming from New Brunswick rather than Quebec like you thought. This takes a lot of the guesswork out production so you can figure out where and how much to invest in. We talk about something similar to this when starting out your business for the first time in my other blog, Any Idiot Can Start a T-shirt Company

PRE-ORDER campaigns evoke aspects of sustainability by utilizing this method. Instead of producing an even split across sizes or a flat amount of products, you are producing ONLY what you need. There is little to no waste. Nothing is getting produced that you don’t need or won’t sell. It’s also a great risk-free way to test out a collaboration or partnership with someone new to the business. Since there is little to no money up front, outside of some mockups, potentially a sample and the time put in to organize the PRE-ORDER campaign, it’s a risk-free alternative to putting large amounts of your resources up front into a campaign or product. 

We’ve seen some brilliant success with PRE-ORDER in the past with partners like Kodette Labarbera, Ryan Nugent-Hopkins and Andrew Phung. We got to make a whole Canadian-made collection together with them, raise thousands of dollars for their favourite causes, all without them having to spend a penny up front and with minimal investment on our end. 

I wouldn’t recommend this method or approach with EVERY product you produce because there are a few downsides with it. For one, if you have a somewhat lengthy production process of a few weeks to a few months, customers may wait a month or before from the time they purchase to the time, it delivers to them.

When we launched our Healthcare Bamboo Zip-Ups as a PRE-ORDER last year at the start of the Pandemic, we had unforeseen delays in our supply chain that had some customers waiting for a few months before getting their garments in their hands. Luckily for us, they were very understanding with what was going on in the world and together we raised over $20,000 towards the United Way of Calgary COVID-19 Community Relief Fund. Without running this program as a PRE-ORDER, there would have been no way that we could have thought to produce that many Bamboo Zip-Ups to reach a goal like that. 

Here are a few tips if you would like to run your next product launch as a PRE-ORDER:

  1. Have a goal in mind for how many items you want to sell in order to put the product into production. If you need to sell at least 50 or 100 in order to make it worthwhile to produce, make that your goal or at least have a number in mind that you would be comfortable topping up if you don’t reach that goal. If you don’t reach it or sell only a few, you’ll have to refund the customers that purchased the product. 
  2. Make your product description VERY clear that it is a PRE-ORDER, and an estimated timeline of when your customers can expect their products. This makes sure the customer knows exactly what they are in for when they purchase and that they are expecting their product in 1-2 days. Make sure they know that if you don’t sell a minimum amount of the product that you will refund those who purchased them. 
  3. DO NOT run multiple PRE-ORDER campaigns, but focus marketing efforts and resources on ONE campaign in the market, therefore avoiding campaigns cannibalizing each other
  4. Do prep work BEFORE the campaign starts & plan out tactical execution. Get mockups and graphics created. Create a sample product if you can and create content around it, explaining why you want to produce it and how it’s going to help your customers. 
  5. Have FUN with it! These campaigns test out new ideas, reach new demographics, and foster new relationships with people or organizations. If you will not have fun with it and it doesn’t make you excited to work on it, then why spend time and energy on it!

We would love to hear your feedback. How does our PRE-ORDER campaign sound? Have you ever ran one? Have you ever bought from a PRE-ORDER campaign before? Was it one of ours? What was your experience like? Without feedback, we die!

As always, fire us an email at info@locallaundry.ca with questions, comments, crazy ideas or rude remarks - The Local Laundry gang