How To Use Pre-Orders To Validate, Pre-Sell, And Build Hype For A Product

Pre-orders are more versatile and practical for online businesses now than ever before.

You can post a product image along with a short description in the morning and, by the evening, have hundreds of orders from across the world validating or funding that product’s launch.

There are many compelling reasons to offer pre-orders, including their positive effects on cash flow, the flexibility they afford your product launches, and the risks they can offset.

There’s a lot to consider when selling pre-orders for a product, so let’s walk through the different types of pre-orders you can run, how to set one up, and how to make your pre-order campaign a success once it’s live.

What is a pre-order?

A pre-order is an order placed for an item that hasn’t been released or is not currently in stock. They’re shipped to the customer once available. Pre-orders allow customers to order products before they are available.

However, different situations call for various types of pre-orders. A startup that needs cash for its first manufacturing run will have different needs than an established brand looking to test, validate, and capture demand for its next release. Listing an ambitious first run of a product requires more wiggle room than a variation of an old favorite.

Pre-orders can be helpful for various companies, from startups to large corporations (e.g., Sony’s giant Playstation 5 pre-sale) to smaller boutique businesses.

Small, agile luxury brands are sidestepping fashion weeks and choosing to do it their way, adopting a pre-order model wherever possible. The goal is to get closer to the customer and eliminate overproduction.

When and why would you offer pre-orders?

Selling physical goods can involve significant risk and capital. It’s very much the norm to invest thousands of dollars in product development and inventory that may or may not sell, all based on gut feeling and anecdotal evidence. Capturing pre-orders upfront before investing in production can be an invaluable approach to product validation.

Running a physical goods business can also be messy and complicated:

1. Products usually have several third-party suppliers that you need to coordinate with.
2. Those suppliers then have to ship (often from overseas) their part of the product to you or your assembly partner.
3. After this, the final units must be packed into packaging (from, you guessed it, another supplier) all before the product is ready to send out.

It also needs to pay attention to complicated design processes, potential sourcing issues, and back-and-forth communication.

Time-consuming? Definitely. It’s a miracle when everything happens on schedule. It’s also expensive, and even with favorable terms, it often takes a minimum of 6 weeks from placing an order with your supplier to when the product is sitting in your warehouse, ready to sell and recoup the costs.

Offering pre-orders allows brands to take orders and receive money while the above process continues, unlike the standard “waterfall” approach, where one stage has to follow the other.

Another great pre-order use case is the minimum viable product (or MVP). How to launch an MVP revolves around the concept of validating a product idea before committing to it, which is a staple of software but needs to be talked about in e-commerce. Physical products are trickier; however, mocking up new product images to test a product has always been challenging. Pay later and crowdfunded pre-orders allow stores to list new designs and color variants before committing to production unless the offering sells well enough to prove itself.

Kettle & Fire, a leading bone broth brand, took this approach to product validation. Founder Justin Mares was excited about the potential of bone broth as a product and intuited that other people might be, too. He set up a landing page for his premium grass-fed bone broth to validate the idea and drive traffic to it. From the great reception from people, he knew he was onto something.

The great thing about Justin’s story is the low stakes of his experiment. If there was no interest, all he’d lose is the small amount of time and money it takes to set up a landing page. That said, we can do one better by actually capturing that interest in the form of pre-orders (via the crowdfunding or pay-later pre-orders I described above).

Picking your pre-order method: Pay now vs. pay later vs. crowdfunding

There are a few different categories of pre-orders that you can offer, each with its ideal use cases:

• Pay-now preorders are the most common type of preorder. They’re essentially a standard purchase, just with a longer shipping timeline.
• Pay later for pre-orders. The customer places their order now to pay in the future. There’s an understanding that both the seller and the buyer can back out of this deal in the future as money hasn’t changed hands yet.
• Crowdfunding. Crowdfunding sites like Kickstarter allow brands to list pre-production products with a rough timeline for delivery (often months, not days), usually with the understanding that the customer will only be charged in the future if a certain number of pre-orders are made.

‘Pay now’ pre-orders

Using this pre-order method, payment is processed immediately at checkout, just like a regular purchase. However, the ‘buy now’ button will instead say ‘pre-order,’ and additional information will explain the longer delivery time.

Pros:

• You get paid upfront, which is great for cash flow.
• It can capture customers for existing products that are out of stock but will be restocked by a specific date.
• Many pre-order apps can automatically take pre-orders whenever a product goes out of stock.
• There is usually the option to display additional information (e.g., shipping date).

Cons:

• Regular orders are mixed with pre-orders in the customer’s cart, which can complicate shipping costs and create communication issues.
• Not as suitable for uncertain or longer lead times as customers have paid upfront. Any significant supplier/shipping delays can negatively impact brand reputation and be customer service intensive.

‘Pay later’ pre-orders

Like ‘pay now’ pre-orders, the ‘buy now button will be swapped for a ‘pre-order’ button. However, with this method, pre-orders are kept in their separate system until you are ready to collect payment. At this point, payment links are sent to customers, allowing them to complete their orders through your online store.

Pros:

• You can capture orders for upcoming products, as customers aren’t charged until you’re ready.
• Test new products/variants by listing a pre-order, then only charging customers and committing to production if you receive enough orders.
• It allows you to charge customers when you choose, whether before or after you order from your suppliers.
• All pre-orders are kept in their system separate from all other orders until paid.
• Apps often include an email campaign for each product, which can be used to communicate updates and delays and send payment links.
• ‘Pay later’ pre-orders generally don’t cannibalize orders for your regular products. Customers often have a certain number in their head that they’re happy to spend; this pre-order doesn’t eat into that mental budget, as the money isn’t leaving their account until the future.

Cons:

• Payment isn’t collected straight away.
• Not all pre-orders will convert when payment is finally requested.
• Out-of-stock products aren’t automatically listed as pre-orders.

Crowdfunding

Crowdfunding (popularized by Kickstarter) involves a “crowd” of individuals funding a new product or project. This contrasts with a traditional bank, venture capital, or angel investment.

This investment generally takes the form of pre-orders with an extended delivery time (often more than 6 months). This deal is presented via a campaign page explaining what the product is, why it matters, and why the investment is needed. The process is facilitated via a platform like Kickstarter, IndieGoGo, or your store via a third-party Shopify app.

Pros:

• A successful crowdfunding campaign validates a new company or product idea, as you can set a minimum sales target that the campaign needs to reach before you’re willing to fulfill orders.
• You receive money upfront, which can be used to fund production.
• Good for first product launches as these campaigns’ 6-month fulfillment times are standard. Also, crowdfunding backers are often early adopters who are more tolerant of minor product issues and delays.
• Third-party crowdfunding platforms are often happy to promote you to their audience (especially if your product is innovative or timely). My previous company launched on Kickstarter, and we received more than 50% of our pledges from their email newsletter and organic search on the platform.

Cons:

• Not great for incremental product releases. Better suited to new ideas and companies.
• If using a third-party platform, there’s a lot of work involved in running and setting up a great campaign page (for example, you often need a video and supporting visuals to show off the product).
• Crowdfunding platforms usually take around a 5% commission on top of transaction fees.
• Most of the more extensive crowdfunding campaigns you’ve heard of reach their goals by paying to drive traffic to another company’s site (i.e., their campaign page on Kickstarter).
• Customers are mainly ‘early adopters’ who may not be your target audience.

If you’re interested in crowdfunding, you can check out Shopify’s roundup of the best crowdfunding sites for raising money.

How do pre-orders work with Shopify?

Installing a Shopify app with the right features to power your campaign is the easiest way to run a pre-order on Shopify.

The crux of most pre-order apps is communicating that the product in question is a pre-order listing and will not be shipped later. This is usually expressed by replacing the ‘buy’ button with a ‘pre-order’ button, often alongside additional context on the product page.

Once the pre-orders have been captured, they’re collected in Shopify’s order management system or your pre-order app’s dashboard, depending on whether the pre-order has passed through your checkout.

Most (but not all) pre-order app’s functionality is based around:

• Which product/variant will be a pre-order and under what conditions (e.g., 0 stock, specific variant, time limit, etc.)
• The visual design of the button
• Conversion optimization features (such as a countdown timer)

After installing the app from the Shopify App Store, you can access the app from the ‘apps’ section of the Shopify dashboard and start making listings. The app will react to your choices and interact with your store’s theme accordingly.

If you run into any issues, I recommend following the app developer’s step-by-step guide or contacting their customer service if you’re unsure and don’t have an in-house developer.

Pre-order apps for Shopify:

• Pre-order Now: Automatically swap “Add to cart” buttons with “pre-order” buttons for out-of-stock items or display a Pre-order button for coming-soon products. It includes extra features like badges, emails, tagging, mixed cart alerts, and discounts.
• PreProduct: Full disclosure—This is my app. PreProduct is a ‘pay later’ pre-order app based around testing and making Sales for future products. It allows brands to capture orders at any stage in the new product development process and send out payment links when they’re ready. Features include a customizable email campaign, pre-order analytics and management, and a customizable cart.
• Pre-order Manager: This tool works out of the box with no theme customization. You can manage your presale, automatically change your copy to hide “sold out” labels, and apply discounts for pre-ordered items.
• Crowdfunder: If you already have an established store, you can avoid the fees of third-party crowdfunding sites by raising money with the Crowdfunder app. Offer pre-orders while displaying your funding goal and your current supporter count on the product page.

Strategies for running a successful pre-order campaign

Once you have a pre-order app set up, it is relatively easy to start listing new pre-order products. The bulk of your time will be spent on the photography and copywriting involved in your product page.

You will probably have your process for rolling out copy and visual assets, but here are a couple of tips for creating product imagery ahead of time:

• Use factory samples from your supplier for the photo shoot. That way, you can complete your product shots ahead of stock arriving.
• Have similar products already been shot and retouched? It could be a lot cheaper and more efficient to pay a retoucher on a freelancing site to modify these existing photos than to start the whole art direction/shoot/retouch process again from scratch.
• some apps and services will create product shots for you through digital rendering software. This can work well for commonly cut fashion items.
• Sometimes, suppliers will have high-quality photos of a similar product to yours that you can use as is or as a base for retouching a new product shot.

Marketing a pre-order product can work with the usual ecommerce channels you’re already using. However, I’ve seen some outstanding success with the following strategies.

Use viral loops and incentives.

True virality is hard to create on demand, but incentivizing customers to share your latest pre-order product is possible. A typical example is to offer a discount to anyone who shares your store link from their social media account. This is generally carried out through an additional third-party app.

Offering a limited-time discount that is only available for pre-orders can be a great way to add urgency to a purchase. If you don’t want to discount your pre-order but still want to encourage sharing, you can create exclusivity through a waiting list. Maybe your first batch is limited, but customers can share a link to your store to move up the waiting list and secure a spot.

Get creative with your incentives.

Kitri, a London-based fashion brand, has achieved its sustainability goals while creating an incentive to purchase through pre-orders. Their site introduces the Kitri pre-order philosophy:

We’re passionate about producing in limited runs, but we know this means many of you miss out on our most popular styles. Pre-order means we only make what you buy, which reduces waste and is better for the planet! It also means that you can get your hands on sold-out styles.

Pay to promote on social media.

It’s probably no surprise that social advertising works well for pre-orders. You will most likely have some insight into which platform works well for your store, whether it’s Facebook, Instagram, Twitter, Snapchat, or TikTok.

Here are some paid social media strategies to consider:

• Consider using a Facebook/Instagram ‘lookalike’ audience based on your current customer base, then trial 3 or 4 different pieces of creative of the pre-order in the ad. If you have a big enough list and can segment by past purchase, you could target past customers who have bought a similar item.
• Retarget people who visited your pre-order page but didn’t purchase. Potentially even offering a discount this time. Remember to implement a ‘cookies banner’ in your store if you use tracking pixels in the EU.
• Creating a short video that can be shared over social media can be a powerful way of spreading the word about your product. Especially if the video/product is novel, interesting, or funny.

Tap into communities

Do you manage, or are you part of, an online community? Promoting your latest pre-order release to a community can be a great free marketing channel.

Facebook groups, forums, and Slack channels are all great ways to connect with people who share a specific interest or outlook. What kind of person does this new pre-order product appeal to?

One of the main things to avoid is presenting as spammy or transactional. If you don’t already have a reputation in the community, remember that people like buying from people; share anecdotes, reply to comments, show genuine interest, and use it all to get closer to your target audience.

You can use SparkToro to research where your target customers hang out. The more specific to your brand and product, the better.

Early adopters love to be the first to get their hands on a new release, so consider playing into this by launching to a select group before going out to the rest of your audience.

Collaborate with influencers 

A powerful way to drive traffic with a high intent to purchase is to partner with another brand or influencer on a limited-edition collaboration. There are different influencer discovery platforms where you can find the person who is the best fit for your pre-order product.

Using ‘pay later’ pre-orders, you can run low-risk experiments. For example, negotiate a deal with an influencer to release a partnership product if they can drive a certain number of pre-order customers to your store. If the target isn’t achieved, email customers to let them know that you won’t be collecting payment. If it is, you’ve just found a new source of customers.

The influencer marketing industry has matured, and many influencers know their worth, which means prices have never been higher.

A cheaper but riskier approach is to mail pre-release product samples to a handful of specifically chosen people. You could include a handwritten note mentioning why you thought of this influencer for this product. It’s probably better not to explicitly ask for anything in return, as this could come off as manipulative. If they like it enough, there’s a good chance they’ll post it on their feed anyway. You can reach out to them or their representative using their mailing address.

On the Shopify Masters podcast, Josh Snow, founder of SNOW teeth whitening, talks about his success activating micro-influencers among his customer base. These are simply customers with a small but engaged audience who are excited about the product and incentivized to share it on social media for loyalty points or a commission.

Validate your next product innovation with a pre-order

The ability to validate products, build hype, and improve cash flow through pre-orders can be a great addition to your toolkit at whatever stage you are with your business.

Whether it’s crowdfunding for a startup, ‘pay later’ pre-orders for releasing new products, or ‘pay now’ pre-orders to replace that ‘out of stock’ banner costing you sales, you can capture orders before you ship.

Special thanks to our friends at Shopify for their insights on this topic.