Pre-orders and back-orders

Pre-orders and back-orders are most integral part of inventory management with respect to an ecommerce site. I’m not detailing what these terms  mean here. Most of the people who are in ecommerce are already conversant with them . Wikipedia has a nice short article on Pre-order – www.en.wikipedia.org/wiki/Pre-order

Here in this article I will try to point a few pitfalls in dealing with pre-order and back-order implementations for an ecommerce system.

Here are a few scenarios that need to be considered when you are designing your system

1. Inventory

If you are using any  well-known ecommerce platform ( Hybris, WCS, ATG, Demandware) , pre-order/back-order support is built-in in the inventory module.  Out of the box or if you are building in-house system, following aspects need to be kept in mind for inventory.

  • Products shall be marked as pre-orderable/back-orderable in the inventory. If marked so, availability/release  dates and qty shall also be marked.
  • On the product page, release dates shall be displayed clearly ( Pre-order messaging)

2. Basket

  • Mixed basket:   Mixed basket of pre order and normal items. Will you  authorise  for 100% amount for the complete basket ?  Since one  or more items in the basket are pre-order,  they may be fulfilled after a significant period of time, will still reserve money on customer card for such a long time ?

Solution impact:  It is not a good practice to authorise 100% of the amount for a pre-order item.  If you want to do partial authorisation  (some times just a penny authorised) , then the API call to payment gateway shall be designed  in such a way ( i.e. identify n the basket if you have in-stock and pre-order items. For in-stock items make a 100% auth call and for pre-order items make partial amount authorisation API call. )

Secondly when the pre-order item is shipped, you have to auth & settle on the same card. The frequently occurring  issue here is card expiry. If you have penny authed on the card when the pre-order was placed,  after shipment ( typically after 2-3 months , mainly for DVDs etc), that card may not be valid (might have expired). So it is advisable to re-authorise the card before shipping. For re-authorisation, you may need to contact the customer again as you can’t re-authorise without the CVV code ( which can’t be stored).

  • Pricing rules
    A pre-order item,  may have a price today, but on the date of release ( may be 3 months in feature) the price may drop or may even go up.  Will you consider giving customer a price promise while he is placing an order for Pre-order item.  If you are giving price promise, and the item price reduces during fulfillment (time of release) , you are charging the reduced price to the customer.  On the other hand, if the price goes up, you are not charging the higher price for the pre-ordered item.

It is important to have a clear policy and call it out clearly on your channel  (Web, Mobile, Call Centre or in store).

Solution impact:  Payment calls may have to made again before the shipment  is done for new prices (if reduced prices are now in place).

  • Cancellations /amendments

Due consideration must  be given to cancellation and amendment rules.

Solution impact :

Is your system  capable of cancelling part of the order ? i.e. if an order consists of  in-stock SKUs and Pre-order SKUs and customer has requested to cancel only the pre-order, does you system handle it.

Also, if a pre-ordered quantity  is to be amended  to add more items, from system point of view, would you like to amend the same order or create a new order ?

3. Fulfillment system notification

On few occasions an order may consist of in-stock item and pre-order item. When this order goes to fulfillment system,  the fulfillment team can only ship the in-stock item.  There must be a notification mechanism within the fulfillment system, that notifies the fulfillment team,  when the pre-order items are available for shipping and the orders in which these items exist. So that fulfillment team can open those order and ship the items.

Author

Sanjeev Desai

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