It is important that you have a process that offers good customer service while preserving your reputation and financial health.
Advantage of accepting pre-orders
When a qualified buyer is interested in purchasing an unavailable bike from you, it is a sound business decision to close the sale.
If you don’t, a motivated buyer will keep searching for a bike until they find an alternative somewhere else. If you secure the sale for yourself, even with a pre-order, you can grow your revenue with scarce inventory.
When you accept pre-orders and deliver on customer expectations you can earn a new customer or validate your trusted relationship with an existing customer.
For these reasons, it makes sense for you to establish a process for these sales opportunities.
Downside of accepting pre-orders
While every bike shop has a process for special orders and even managing the occasional extended timeline, most shops have had to develop new systems for managing a high volume of bike pre-orders. This is especially true when suppliers understandably struggle to provide delivery timeline expectations.
The effort involved in developing, managing, and refining new procedures can put strain on your business. This can be particularly challenging when you are operating at capacity.
In addition to operational strain, pre-orders can lead to customer service challenges. Customers have paid money for a product they haven’t received. They may be frustrated, which can be compounded by vague answers or uncertain timelines. These frustrations can turn customers away from your business and lead to bad online reviews.
It is important not to overlook the financial risks of pre-orders as well. When you accept full or partial payment for a product you haven’t delivered - then the customer is essentially loaning your business money. You intend to deliver the product to your customer, but you aren’t always successful either because of product delays or customers losing patience.
Unless adequate funds are held in reserve to refund customers who cancel orders, then you may find yourself facing a future cash crunch depending on your volume.
A process that works
We surveyed SmartEtailing clients of various sizes to better understand what’s working for bike shops. Here’s what we learned:
- Only sell in-stock bikes online
- Provide a clear path for online shoppers to request pre-orders
- Redirect customers to available product if possible
- Take 30-50% deposit from customer over the phone (or invoice)
- Use a spreadsheet to track outstanding orders
- Assign a staff member from each store responsible for pre-orders
- Communicate clearly with customers for updates
- Underpromise and overdeliver on timelines if possible
This method has proven to be very effective for successful retailers and hopefully offers some perspective for you to inform your process.
All but one of the retailers we spoke with advised against taking full payment for pre-orders. This can tie up customers’ funds for a long period of time, may lead to additional costs from larger refunds, and increases your financial exposure.
While we expect shortages to continue, we do not expect the need for pre-orders to extend for multiple years. It is important that you have a process that offers good customer service while preserving your reputation and financial health.
Connect with interested buyers
We can make the online path for customers to request pre-orders easy.
Our marketing team designed a custom solution to add a “Notify Me When Available” button to product detail pages for items that have a positive “balance on order” in your POS Sync integration. For a small one-time fee, we can make it easy for customers to request information directly from the bike page they are viewing.
Sign up today to have this button added to your site.