Customers use preorder services to purchase new products after seeing announcements on ecommerce sites or social media. For example, when a new product is scheduled for release in a few months, preorders are often used as part of a strategy to generate interest before the official launch date.

With preorders, customers can ensure that they can get the most sought-after, trending products without worrying about sellouts. For this reason, preorder sales have become widely adopted in Japan as a way to meet customer needs.

In this article, we explain preorder sales, including how they differ from made-to-order products, as well as their advantages and disadvantages for ecommerce businesses.

Key takeaways

• With preorder sales, businesses accept orders before products are released. Then, the product is delivered at a later date when it becomes available.
  
• While preorder sales can help maximise sales opportunities, it is important to remember that they also increase the operational workload.
  
• To simplify back-office operations—such as handling cancellations and refunds after a preorder is confirmed—it is effective to manage the website using a centralised management system.
  
• Products suitable for preorder sales include those that are trending, rare, or seasonal, as well as those with clearly defined delivery dates.
  
• With Stripe Checkout, you can optimise and simplify your ecommerce site’s payment process, with support for over 30 languages and more than 135 currencies.
  

What are preorder sales?

Preorder sales involve businesses accepting orders from customers before products are actually released. Then, products are shipped or delivered at a later date. Preorders are frequently used for new collections from popular apparel brands and new video game consoles. They can also be used for products that are currently out of stock and awaiting restock.

One key feature of preorders is that they help businesses have a better understanding of demand before they release a product. In addition, customers gain the assurance that they will be able to get the items they want.

The preorder system works as follows:

• The business releases product information (e.g., announcements regarding price, release date, preorder period, etc.).
  
• Customers begin placing preorders.
  
• The business receives the product.
  
• The business ships the product to customers in time for the release date or restock date.
  

Note: “Preorder” is the English term for this practice, and it is sometimes referred to as “preorder” in Japanese as well.

Differences from made-to-order sales

Many people confuse preorder sales and made-to-order sales. Their approaches to production planning differ fundamentally, as shown in the table below.

For preorder sales, planned production volumes are determined in advance. This includes both preorder and general sales units. In addition, production typically begins at least partially before the business opens preorder reservations. As a result, there is a risk that the business might produce excess inventory. However, as explained in the next section, if businesses use preorders to create accurate sales forecasts, they can prevent excess inventory.

On the other hand, made-to-order production only manufactures the reserved quantity after the business receives the orders. Therefore, unlike preorders, there’s no risk of excess inventory.

With preorders, production volume is not determined by the number of orders. However, with made-to-order production, businesses only manufacture the exact quantity that customers reserve.

Advantages of preorder sales

By implementing a preorder system, businesses can enjoy the following benefits.

Predict sales

By using preorders, the number of orders can be determined in advance. Using preorder data makes it easier to estimate the production volume needed for the general release. This allows for more accurate forecasting of overall sales.

Accurate sales forecasts make it easier to develop production plans and help prevent cash flow problems caused by excess inventory. This can lead to improved inventory management.

For example, in the case of preorders for apparel products, the number of orders varies depending on the colour, pattern, and size, even for the same item. The quantities produced for general sales can be adjusted according to the preorder data.

Prevent customer exit due to out-of-stock items　

If products are temporarily out of stock when customers visit an ecommerce site, offering preorders can help the business save the sales opportunities. Because additional production can proceed while the business monitors order status, it can also reduce the risk of excess inventory.

Also, if a business decides to produce a new shipment of out-of-stock items, it’s important for the business to clearly state details—such as the expected restock date—and to regularly provide updates during the waiting period to help maintain customer interest. This approach encourages one-time purchases and helps build a base of repeat customers.

Maximise sales opportunities for seasonal products

For products with limited sales windows due to seasonal factors—such as winter coats and sweaters—it is important to implement strategies aimed at boosting sales within a short time frame. By offering preorders, businesses can attract customers before products go on sale.

Furthermore, “members-only preorders” and “preorders with special perks” can make customers feel special, which in turn boosts their desire to purchase.

Disadvantages of preorder sales

While preorders have many advantages, there are also drawbacks to consider.

Increased mistakes due to high workload

With preorder sales, all orders received during the preorder period are shipped at once. Therefore, it is important to secure warehouse space capable of storing and processing large volumes of inventory. Businesses must also secure the additional staff required to handle this volume.

However, even if enough staff are available, there is still a risk of delivery errors and quality control issues due to a sudden increase in workload. If these mistakes escalate into complaints, they can result in a significant drop in customer satisfaction. For preorder sales, consider setting a limit on the number of orders based on the available time, staff, and warehousing space.

Risk of cancelled orders

For various reasons, customers can change their minds after making preorder reservations. In particular, the longer the preorder period, the higher the cancellation rate. Therefore, when accepting preorders, it is important to move forward with production preparations after the business establishes a reasonable estimate of the cancellation rate for the preordered items.

Since customers might forget they placed preorders, it’s also important to send notification emails once the product is in stock. A simple message works well, such as, “Your preordered item is scheduled to ship on [Month] [Day].”

Risk of payment issues

With preorders, there is often a delay between payment and shipment, depending on the payment method. Therefore, payment issues can arise.

For example, with credit card payments, revenue is secured when the product ships. If there is a long period between the time a customer preorders a product and it ships, a card that was valid at the time of the order could have expired or been cancelled by the time the business finalizes the sale. In such cases, it isn’t possible to invoice the sale before the product ships. Therefore, businesses must notify customers in advance to avoid payment issues.

In addition, with cash on delivery (COD), customers can refuse to accept the package for various reasons. If this happens, the business is responsible for the shipping and return costs, causing a financial loss. For this reason, it is important for businesses to consider not allowing COD for preorder sales and accepting payment methods that offer solid collection rates.

How to offer preorder sales

The main steps for implementing preorder sales on an ecommerce site are as follows.

Create a preorder page

Create a new page for the preorder sale. This special page should include detailed information about the relevant products, as well as the preorder start date, product release date, and estimated shipping date.

The key point is to create a page that makes customers want to place preorders even before reservations start. If there are any perks available for early reservations, clearly state that information as well.

Implement a centralised management system

If you sell products on multiple ecommerce malls or through your company’s ecommerce site, it’s important to implement a system that allows you to centrally manage customer information and sales data. This enables real-time, integrated management through a single system, even when using multiple sales channels. This can improve operational efficiency.

Select payment methods

Select the payment methods customers can use for preorders. Credit card payments, bank transfers, and convenience store (konbini) payments are the most common options. Offering a variety of these payment methods can help improve customer satisfaction.

Set preorder start and end dates

Set the period when customers can place preorders. When announcing preorders on your company’s ecommerce site, in email newsletters, or on social media, clearly state that reservations will not be accepted after the preorder reservation period ends.

Send preorder confirmation emails

Configure the system to automatically send confirmation emails to customers after they complete preorders. If there is a significant gap between the preorder and the product shipment, set the system to automatically send follow-up emails regarding shipment as the scheduled date approaches.

Key points for successful preorder sales

To ensure the success of a preorder campaign, it is important to address customer concerns and build trust.

Attract customers through advance notice

For preorder sales, it is important to attract customers and reach as many potential customers as possible before you release the product. Use social media, email newsletters, and online advertising to effectively drive traffic to your preorder page:

• Social media: Hashtags can help effectively spread information.
  
• Email newsletters: Use past purchase history data to effectively target customers highly interested in your products.
  
• Online advertising: Increased brand awareness can help attract new customers.
  

Create preorder bonuses

By offering incentives or perks that capture customers’ interests, you can make preorders feel like a better deal. This can help increase the number of orders. Specific examples include offering special prices only available when preordering, extra reward points, and exclusive promotional gifts.

When offering promotional gifts, provide samples of your products (e.g., trial-size cosmetics or perfumes). This complements the preordered items and serves as an opportunity to promote other products.

Communicate with customers

Providing ongoing updates—during the preorder period and after it ends—helps to maintain customer anticipation. This can improve customer satisfaction and help to prevent cancellations.

Communication with customers should continue after sending confirmation emails. It’s important to maintain the customer relationship and continue providing reassurance through updates on production and shipping progress. You can also share the development team’s thoughts and messages via email and social media.

If there are delays in the arrival or shipment of products, promptly inform customers of the reason, and let them know the new estimated delivery date.

Provide a simple payment experience

Even if customers show interest in preorders, a complicated payment experience can dampen their enthusiasm and potentially lower the conversion rate. This includes limited payment methods, confusing checkout processes, or a lack of flexibility regarding payment processing.

Therefore, it is important to refine the payment environment for preorders. This means offering various widely used payment methods and ensuring the checkout page is simple and easy to navigate. In addition, offering payment options—such as paying a portion of the total up front and settling the balance before delivery—can help prevent cart abandonment and improve convenience.

Products suitable for preorders

Preorders are considered particularly well-suited for products with the following characteristics.

Highly anticipated new products

For new products that have never been on the market, the lack of sales data makes it difficult to forecast demand. Preorders make it possible to get a rough idea of demand, even without historical sales data. This is a major advantage in new product development.

Examples of these kinds of products include new collections from fashion brands and the latest models of computers and smartphones.

In particular, for products that generate significant buzz in the media before their release (e.g., the latest smart home devices and popular video game consoles), businesses can use preorders to maximise the products’ impact.

Rare and limited-edition products

Preorders are ideal for products where supply is not expected to meet market demand, such as limited-edition collaborations with popular celebrities or one-of-a-kind items by artists. For these highly sought-after items, customers are determined not to miss out, so they typically choose to preorder them.

Seasonal products

Seasonal products are well-suited for preorder sales because their release dates are largely fixed, and they are highly effective at attracting customers. Typical seasonal products include the following:

• New Year food (Osechi dishes)
  
• Valentine’s Day chocolates
  
• Mother’s Day carnations
  
• Midyear and year-end gifts
  
• Christmas cakes
  

In Japan, businesses often hold large-scale sales that coincide with major holidays, such as Golden Week and the end of the year. It is common to see preorders offered during these periods. This includes Golden Week mail-order sales and preorders for gourmet ingredients and year-end “lucky bags.”

Products with scheduled delivery dates

Items that are temporarily out of stock but have a set restock date, as well as agricultural products with a specific harvest season (e.g., newly harvested tea, which is in season in May), are also well-suited for preorder sales. Customers typically look forward to getting a product well before it goes on sale and are eager to get it as soon as possible.

By announcing a specific delivery schedule and offering the ability to place preorders, businesses can attract customers who are eagerly awaiting the arrival of the product. This announcement could include a message such as, “Expected to arrive around [Month] [Day].” For seasonal ingredients—fruits and seafood, in particular—the strong desire to enjoy them at their peak is the key factor driving preorders.

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