Pre-order protected by Purple Dot: Why Trust Matters to Create a Sell Earlier World

At Purple Dot, we’re 2.5 years into our journey of helping brands across the world sell earlier through pre-orders. We proudly enable pre-sales for a diverse group of modern eCommerce brands from toys with Mattel, to Gen-Z fashion with Oh Polly, to trendy hat drops with Goorin Bros, to luxury skincare with Azio Beauty – and everything in between. We’re closing in on powering 1 in 10 orders for our customers that contain a product that’s not yet ready to ship.

Being on the frontlines of innovation within inventory management has opened our eyes to how much further the industry can go to optimize for online selling. Yes, a lot has been done to optimize for an online storefront, fulfillment, and the post purchase experience, but the new frontier of disruption is clearly upstream in supply chain and core operational logistics. These are the bigger and more hairier challenges – and opportunities.

As we dove into in our Sell Earlier blog post, much of eCommerce has been modeled after brick and mortar. Our favorite one is *when* merchants start to sell. In the physical retail world, it is common practice to wait until stock was on-hand on the shop floor to start selling it. Why? Because shoppers can touch, feel, and experience the product to build trust that it’s the right purchase for them. Afterall, what you see is what you get – so stock must be on-hand to sell!

But in eCommerce, consumers don’t get to touch, feel, and experience the product before making a purchase decision. Because of this, brands don’t actually *need* to have stock on-hand to start selling it – but regardless, to date, they wait. They wait until stock is at the warehouse to start selling it, and their entire tech stack is built on this logic. But it’s this core operational practice that our brands are determined to disrupt – so they can be in full control of *when* they can start to sell.

When we first started building the infrastructure layer that could easily give merchants the flexibility to sell earlier before that stock is on-hand – we knew that consumer trust would be key. Afterall, building consumer trust is always a core driver of sales and conversion.

But with pre-orders, this trust takes on a totally new dynamic vs in-stock purchases. New questions emerge for the consumer that center around “Is this really going to ship on time?”, “What happens if it’s delayed?” or “Is my money just going to be tied up in a black hole?”.

Let’s face it – there is inherent higher risk for the consumer when they buy early. They’re placing more trust in your brand that you’ll come good on the goods you don’t yet have. This is why the FTC has weighed in with regulations for pre-orders – because charging for goods that aren’t yet ready to ship is ripe for illegal commercial practices at best, or fraud at worst.

And because of all the inevitable moving pieces within the eComm supply chain, paired with that tech stack to date which can’t easily sell stock before it arrives, most consumers have had some kind of bad pre-order or out-of-stock experience in the past that can give them pause to buy early. This experience can impact their willingness to pre-order again – whether from that same brand or any other brand. Everyone has heard a Kickstarter horror story where the brand never shipped. It takes only one bad actor, despite even the best original intentions, for a consumer to harbor concerns that may damage your own pre-order strategy and conversion.

That’s why, when you think it through, a sticky, bad reputation amongst consumers is the biggest risk to a sell earlier future. This risk is both for brands who have already worked so diligently to build shopper trust through years of commerce, as well as new brands who are establishing that trust for the first time. To create a world where brands can consistently sell 10%, 20% or even 30% of their inventory before it reaches the warehouse, so that brands can always sell more and store less, relies on establishing and maintaining this trust and transparency with the consumer audience at large across eCommerce. It relies on the consumer seeing “Pre-order” on any brand and not hesitating to buy simply because they’re worried about what will happen next.

At Purple Dot, we are committed to powering this sell earlier future of eCommerce. And we purposefully built our product alongside our earliest brands with this long-term view in mind. We didn’t want to cut corners, only for this sell earlier concept that our brands were so adamant to make work, to be a short-lived flash-in-the-pan because of broken consumer trust. Because then, eCommerce would be right back where we started, waiting for stock to arrive to sell -- and the inefficiencies, missed sales, and unsold inventory problems that waiting has caused.

That’s why we started from first principles to establish and build trust through the product for our brands.

Most importantly, for pre-orders that charge upfront, Purple Dot transacts the order and escrows the consumers’ funds until stock arrives. Not only does this enable a system with FTC compliance out-of-the-box, but as a 3rd party facilitating this escrow-like transaction, we can begin building trust at scale – “Your pre-order will ship, or your money back. Guaranteed”

And while these funds are in escrow, Purple Dot also has visibility if the estimated ship dates change and incentivizes brands to always keep these dates up-to-date so that consumers are informed, which is also a regulatory requirement. Consumers can cancel for a full, instant refund anytime before their pre-order ships, and having a 3rd party back-up these promises helps build trust that the brand is taking their pre-order experience seriously and transparently. “We’ll keep you in the loop the whole time.”

By powering these important parts of the pre-order experience, our mission is to help brands build upon their trusted relationship with their shoppers so they – and the entire industry -- can continuously rely on selling earlier to transform their business.

And as a final thought, people often ask us why we named our company “Purple Dot”. With another throwback to physical retail, you probably remember going into stores and spotting a red dot on a price tag. You knew that this red dot means a sale or a discount. With a Purple Dot, consumers know it’s a pre-order, and know they’re in safe hands to buy early from their favorite brands.  

Pre-order protected by Purple Dot. Onwards.

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