Management & Finance > Merchant Voice

The perils of pre-orders

A few years ago, much of my business was built on customers ordering products in advance of the products’ release. Pre-orders allowed us to know what the likely demand was for an item and buy in sufficient quantities. It meant that when the item finally arrived, most of the stock was already paid for. It took much of the risk out of retail.

Another advantage was that the product already had a detailed page on our website and was indexed by Google long before it came into stock. Those of us who did such pre-orders had an advantage over those retailers who only listed products when they came into stock.

Sadly the advantages for pre-orders have been eroded by the disadvantages. The suppliers saw a good thing and started asking retailers to pre-order — so the suppliers could gauge demand.

Moreover, in my line many suppliers rarely offer more than a limited set of pre-orders. Retailers who do not place a pre-order often miss out. The main problem with suppliers offering pre-orders is typically a too-short window that closes long before the stock is due. This means that the supplier pre-order cutoff is typically long before a realistic consumer cutoff date. So retailers have to go back to guessing.

In more recent years, the rise of Amazon and Ebay has further reduced the viability of pre-orders. Most consumers, when they buy from Amazon or Ebay, expect near instant delivery. So regardless of where they buy an item, even from your own website, they are used to prompt delivery and complain when the item does not arrive. Even when your site clearly says “PRE-ORDER” in large capital letters, shoppers do not read. And it is always the retailer’s fault.

As for selling pre-order items on Amazon or Ebay, forget it. Ebay, especially, requires you to stock the item you are selling. If it does not arrive to the customer within a few days, you will suffer from Ebay’s new late delivery metric, if not negative feedback.

Amazon is subtler than this, and by being so is more dangerous. Amazon gives you the ability to label a product as a pre-order. It sends emails to the customer detailing the expected dispatch date and delivery date as set by you, such as a couple of months in the future. All seems well. The massive problem is that after 30 days, if you have not dispatched the order, Amazon cancels it. Irrespective of what you set the pre-order date to. Your metrics also take a hit.

Another problem is that many manufacturers do not have any sense of urgency. Planned release dates can pass and no stock arrives. I have experienced stock arrivals up to a year late. One of my most annoying late deliveries was Santa gizmos that arrived in January. Slipping release dates are annoying. Customers get upset and blame the retailer. Orders get cancelled. No one wins.

One of the worst cases for me was the Django figures. A few were released in the U.S., having been flown in for the film release. The vast majority were shipped by sea and were due in the U.S. a few weeks later. A separate container was coming to the U.K., where I live, with a few hundred cases of these figures.

Demand for these figures was huge. So I listed them on our site and Amazon. I received hundreds of pre-orders because I kept my prices sensible. All my stock was pre-ordered and the supplier confirmed that the figures were loaded on a container and on the sea, due to arrive in a couple of weeks.

Then the movie studio received many complaints and the U.S. stock was withdrawn. My stock was safe and already on its way. However I withdrew the item from sale. The question was what to do with the already existing orders. The figures would land in time — within Amazon’s 30-day limit — but would the supplier release the stock?

I contacted every customer and asked if he would wait, or if he wanted the order to be cancelled. The vast majority of customers said they would wait. Unfortunately, although all the Django figures arrived and are in a warehouse, none were released by the supplier. I had to cancel all these orders and inform all the customers. I got away with it, barely.

I kept all the customers informed every step of the way. I had them all on my side and did not receive a single negative feedback. It could easily have gone the other way and with the potential of over 100 complaints, I would easily have been expelled from Amazon.

The point is that when you offer an item on pre-order, you are taking a risk. You have no control. The item could arrive late, or never. The item’s specification could change. Indeed the price could change. Worst of all is that it is you, the retailer, who will be blamed by the customer if any of these things happen.

That is why I have stopped doing pre-orders. It is simply not worth the problems that can arise.

Richard Stubbings

Richard Stubbings

Bio   •   RSS Feed