Pre-Orders Identifies Customer Demand

Source: Signature9, Mar 2011

Pre-orders have the potential to create efficiencies in production for designers, and inventory for retailers. At the moment, designers produce collections based on orders from store buyers, buyers place orders based partially on a history of what’s sold in the past and what they think customers will want in the future.

What happens when bets on either end are off? Look at the success of Gilt, Hautelook or RueLaLa. That’s what happens when companies create efficiencies at the end of the buying cycle, pre-orders look like part of the way that companies will be able to create efficiencies at the beginning. Unlike the flash sales sites, pre-orders create efficiencies by not only using demand to influence supply, but by providing the funding to kick things off in the first place.

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