In part 1 of this blog post, we discussed subscriptions and recurring orders, two features provided out of box by IBM Commerce solutions. In this 2nd part, let us discuss another popular order capture mechanism – pre-orders.
A pre-order is an order placed for an item which has not yet been released. These days many retailers use pre-orders to allow for shoppers to reserve their own personal copy of a highly anticipated product. Apple iPhone is a great example of such a product for which there can be a huge initial demand on release of new models.
Pre-orders allow consumers to guarantee immediate shipment on release, manufacturers can gauge how much demand there will be and hence how large initial production runs should be, and sellers can be assured of minimum sales. Additionally, high pre-order rates can be used to further increase sales.
Retailers can provide incentives like discounts, associated exclusive merchandise etc. to encourage shoppers to pre-order.
On the face of it, you might think that IBM WebSphere Commerce does not support pre-orders, but it provides enough flexibility to allow for support of pre-orders to be added with some customization. But first, let us explore the concept of pre-order in a little more detail.
The pre-order feature can be implemented in various forms and this can dictate the complexity of the processes involved. Let us discuss two of these variations:
Pre-order without payment
Some retailers allow for a product to be pre-ordered without capturing any payment. When the product becomes available, the customer can be asked to complete the checkout flow and make the payment. In this case, pre-order is really just a reservation process where a customer’s intent to purchase is captured with bare minimum personal details like email address, so that the customer can be notified when the product becomes available. There are some points to consider about this form of pre-order:
- The reservation process can be implemented as a bespoke feature in WebSphere Commerce where in there can be a simple form to capture the customer’s details and a notification mechanism to inform the customer when the product is available to order. The customer details can be stored in a custom data model and a custom scheduled job can send out notifications either through the WebSphere Commerce messaging system or through an external email/SMS provider.
- Since the customer is not paying for the product at the time of reservation, there is no guarantee that he/she will actually buy the product when it becomes available. Hence, this does not provide an accurate picture of the initial demand.
- Again, since payment has not been captured, the retailer is not bound to offer the product at a certain price. The price may change when the product actually becomes available.
Pre-order with payment
An alternative approach can be to capture the pre-order in a way similar to how normal orders are captured. That is, allow the customer to complete the checkout flow and authorize the customer’s credit card for the amount. Once the product is ready to ship, then the customer’s credit card can be charged. One important point to note is that credit card pre-authorizations typically expire after 5-7 days, after which the hold placed on the funds is released. The customer needs to be contacted again for a fresh pre-authorization to take place. So, this approach is ideal if the time difference between when a product is available for pre-order and when the product is available to ship is between 5-7 days.
In some countries it may be OK to capture funds immediately for a pre-order product, as long as it is clearly communicated to the customers that they are being charged in advance for an item that will ship at a later date. However, there is a higher risk of chargebacks in this case. If you make people wait before you ship, a certain share of customers always end up asking for their money back.
Now, let us see how the various subsystems of WebSphere Commerce can be adopted to handle pre-orders.
- Catalog – Products that are available for pre-order need to be marked as such. This can be done by using any of the customizable fields (for e.g. FIELDx in CATENTRY table) to store the flag. On the UI, the “Add to Cart” button can then be shown as “Preorder Now”.
- Inventory – A retailer can decide to offer either a fixed quantity of a product or unlimited quantity for pre-order. When using the non-ATP inventory model, INVENTORY.INVENTORYFLAGS column can be set to 3 which means ‘do no check inventory, do not update inventory’, thereby allowing for unlimited quantities of the product to be ordered with no inventory in stock. When using the ATP inventory model, ‘expected inventory’ can be used to track inventory for a pre-order product. This is similar to the back-order concept available out of box in WebSphere Commerce where in an order is captured against expected inventory and the fulfillment is placed on hold till inventory becomes available and can be allocated to the order.
- Order management – Orders having pre-order products can be marked as pre-orders by using any of the customizable fields (FIELDx) in ORDERS table. This flag is used to indicate that the fulfillment of such orders will happen at a later stage. When the business is ready to deliver pre-order products, then the inventory status of such orders can be updated and their fulfillment can be started.
- Marketing – The marketing strategy for pre-order products is critical. Pre-orders are only successful if there are customers that are excited about the newly launched product and are willing to buy it without waiting for reviews and feedback. WebSphere Commerce has powerful precision marketing features that can be used to advertise the pre-order products and help build the buzz around them.
Pre-orders, subscriptions and recurring orders can be powerful order capture mechanisms which when implemented properly can greatly increase a retailer’s revenue. As we have seen, the business processes related to these features can be much more complex and nuanced when compared to normal orders. So, apart from the technical aspects, it is equally important to plan and build the right business processes for these features to be successful. It will take a joint effort between the technical solution architect and the business analyst to get there.