Get to Know What a Pre Order is: Definition, Pros and Cons

When buying a product or item, you may often hear the term pre order. However, do you know what a pre order is? The term pre order itself is more often found in online shops such as on marketplaces, e-commerce or websites.

The pre order system is often used by many sellers in online stores. This system is considered to provide benefits from various aspects. Not only advantages, the pre order system also has weaknesses that have the potential to bring losses to the business.

In this  TransTRACK article, we will explore more about the meaning of pre orders, their advantages and disadvantages. Let’s talk about it!

What is Pre Order?

Pre order is a term generally used in the context of ordering products before they are actually available or launched into the market. In other words, customers can order and pay for a product before the product itself is ready to be shipped or picked up. This practice has become a common strategy used by many companies to gauge consumer interest before production begins.

So, what is a PO system? Simply put, a pre order is an ordering system where consumers can secure certain products before they are on the shelves or in stock. This is different from conventional purchasing where buyers purchase products that are already in stock. The PO system is generally done by paying a certain amount of money in advance or a deposit to order certain products.

Advantages of Pre Order System

The pre order system, where consumers can order products before they are available in the market, has a number of advantages that make it a popular strategy among businesses. Here are some of the advantages of the PO system:

No Big Capital Required

In implementing the PO system, sellers do not need large capital. This is because generally the buyer will pay a down payment or the full price of the goods ordered at the beginning. With this system, anyone who wants to start a business but is constrained by capital will be greatly helped. Deposits from customers can be used as seed capital to start a business.

Creating Consumer Enthusiasm

By opening a PO system, companies can create a high level of enthusiasm among consumers. Through careful marketing strategies, such as exclusive announcements, special discounts, or bonuses for PO systems, companies can increase consumers’ desire to own the product.

Prevents Overproduction

One of the main advantages of a PO system is its ability to ensure product availability. By receiving orders before production begins, companies can gauge consumer interest and produce products according to the number of orders received. This reduces the risk of overproduction and helps  optimize the supply chain.

Products are Guaranteed to Sell

In a PO system, the seller can ensure that the products produced will be sold because the customer has ordered the products beforehand. This system also ensures that there are no products piling up in the warehouse (overstock) because everything has been ordered by customers. This can help sellers to avoid the risk of loss in their business.

Disadvantages of Pre Order System

While the PO system has a number of advantages, it also has some disadvantages that companies and customers need to consider. Some of the disadvantages of the PO system include:

Longer Customer Wait Time

In a PO system, there is a time lag between the order and delivery to the customer. The time from preorder to delivery can range from a few days to a few weeks depending on the product ordered. This has the potential to cause disappointment for consumers who have made a PO system, especially if the product does not arrive at a certain time.

Doesn’t Guarantee Product Satisfaction

Although consumers can do a PO system to ensure they get a certain product, pre orders do not always guarantee product satisfaction. It is possible that the product received does not match the expectations or description given by the company. This can lead to consumer dissatisfaction and affect the company’s reputation.

Potential Order Cancellation

There is a potential risk that consumers may cancel their orders before the products are actually available. Consumers could change their mind or find a similar product with a better offer before their PO system product is shipped. Cancellation of orders can cause losses for the company. To overcome this, make sure the customer has paid the full price of the product in advance so that there is no gap for cancellation.

Can’t Test the Product First

Consumers who go through the PO system do not have the opportunity to test or see the product in person before making a purchase. They have to rely on the information and images provided by the company. The information may not fully reflect the actual quality or features of the product, which can lead to disappointment.

The definitions, advantages and disadvantages of PO systems need to be considered by consumers and companies. While this system comes with risks, with proper management, the benefits can be significant.

For consumers, it is important to do research before committing to a PO system and understand the terms and policies imposed by the seller. Meanwhile, companies need to ensure that their pre order system is reliable, transparent, and provides added value to customers.

An effective PO system strategy, supported by the technological innovation of  Logistic Service Integrator from  TransTRACK, can bring great benefits to all parties involved. The technology provides an integrated solution to support logistics processes, including order tracking, inventory management, and shipment management.

With advanced integration, companies can optimize their operations, provide better service to customers, and minimize risks associated with delays in the pre order system.