We have worked, and continue to work, with many nonprofits over the years. These organizations have served many causes and are of varied sizes (some are small and local, and others are large multinationals). One thing that always comes up is what strategies we can recommend to help the organization make the most of its branded merchandise and eCommerce. A strategy that I always recommend to generate real fundraising is preselling.
When done right, presales can be an incredibly powerful tool for fundraising and brand/cause awareness.
Inventory projection is challenging, to say the least, not to mention revenue generation and various product development challenges. In the eCommerce world, especially for nonprofits and DTC businesses, conventional approaches often come with challenges including excess inventory, environmental impact, the struggle to predict demand accurately, and cashflow considerations.
Working with various nonprofit and direct-to-consumer (DTC) brands, I’ve learned that presales effectively address these concerns while boosting profits. In this article, I explore how presales can be a win-win situation, particularly for nonprofits, and how brands, especially DTC brands, can use this method to generate demand, increase margins, and contribute to a more eco-friendly business model. Here’s why:
1. Reduced Inventory Risk
Preselling helps you to mitigate the risk of overproduction and excess inventory. Instead of manufacturing a large quantity without knowing the market demand, you can tailor production to match the confirmed pre-orders, minimizing the financial impact of carrying unsold stock.
2. It Helps Gauge Market Interest
Preselling allows your business or nonprofit to gauge market interest and validate the demand for a product before you invest in full-scale production. By securing pre-orders or commitments, you can avoid producing goods that may not resonate with the target audience.
3. Capital Efficiency
Preselling allows you to generate revenue in advance, which gives you capital you can use to fund production. This approach helps optimize cash flow and reduces the need for external financing. It makes for better financial management.
4. Product Development Feedback
Presales allow you to gather feedback from early adopters or customers who have pre-ordered the product. This input can be invaluable for refining the product, making necessary adjustments, and addressing concerns before the official launch.
5. Supply Chain Optimization
By preselling products, you can optimize your supply chain management. Knowing the exact quantity to produce allows for more precise planning, procurement, and logistics, minimizing waste and streamlining the production process.
6. Marketing Momentum
Preselling creates anticipation and excitement around a product before you release it officially. You can leverage this momentum to generate a marketing buzz, attract media attention, and build a community of eager customers who become brand advocates.
7. Early Revenue Generation
Preselling allows your business to generate revenue from the early stages of a product’s lifecycle. This income can be crucial for covering initial expenses like overheads and research and development costs and contributes to the company’s overall financial health.
8. Limited Product Variants
Preselling allows you to focus on producing specific product variants or configurations in high demand, reducing the complexity of production and inventory management. This approach enhances operational efficiency and cost-effectiveness.
9. Time-to-Market Advantage
By preselling a product, you can generate revenue sooner, gaining a competitive advantage in time-to-market. This early entry into the market can be critical in establishing your brand presence and capturing consumer attention.
10. Customer Engagement
Engaging customers in the preselling phase makes them feel involved and boosts loyalty. It creates a relationship between your brand and potential customers even before the product is available, setting the stage for long-term customer satisfaction and retention.
11. It’s Eco-Friendly!
Pre-selling is eco-friendly. It promotes responsible production, reduces waste, optimizes resource use, and encourages sustainable business practices. Sell-through rates, not materials, are the real data point for environmentally friendly products.
But what about the delay in shipping that comes with presales? Let’s dive into what I call “The Amazon Fallacy.”
Does Anyone REALLY Care About Free 2-day Shipping?
No, not really. Unless it’s something you need on the double, like salt, your favorite BBQ sauce for a get-together on the weekend, or something like an emergency-forgotten-anniversary gift, if you care about the brand, you’re not going to feel like 2-day shipping is a deal breaker.
When there is a genuine brand connection and reasonable shipping, presales work. It enables brands to offer reasonable shipping times while maintaining a strong connection with their audience. You can enhance your reputation and boost loyalty by aligning your brand with environmentally conscious consumer values.
Sustainability AND Profitability? Yes, please!
Presales emerge as a powerful strategy for nonprofits and DTC brands, offering a sustainable and eco-friendly fundraising and brand development approach. Organizations can thrive in an environmentally conscious landscape by reducing waste, streamlining operations, and building genuine connections with supporters or customers.
Embracing presales is not just a trend; it’s a strategic move towards a more sustainable and profitable future. The key is finding the right partner to execute a presale’s multiple moving parts. TVP has the tools, both software and physical infrastructure, to help your organization execute presales effectively. We’ve been working with the Paul Walker Foundation over the last few months using presales as a strategy to maximize impact on the foundation, and it’s been wildly successful! Talk to us about your strategy.
