3 Ways Pre-orders Mitigate the Impact of Tariffs

Tariffs continue to pose both financial and operational hurdles for brands — and with their constant fluctuation, they can leave even the most prepared teams uncertain about what’s next. But there is a powerful way to navigate that uncertainty: pre-orders.

Pre-orders buy you time, allowing you to keep selling while you assess the latest tariff developments. They also insulate risk. By better matching supply and demand with pre-orders, you can avoid new overstock costs by only paying tariffs on what you’ve actually sold.

The retail industry is no stranger to navigating economic volatility. For example, when the COVID-19 pandemic hit, brands quickly pivoting to ecommerce and contactless solutions fueled a 26.4% surge in global ecommerce sales in 2020.

Our take on the tariffs is optimistic. Despite the uncertainty, they provide another opportunity to innovate and adapt. Pre-orders can help keep revenue flowing and preserve customer trust and transparency while you work through operational shifts.

We’ve outlined three things you can do now to mitigate the impact of tariffs. Read on to learn more about how you can:

• Keep SKUs online through logistical challenges with pre-orders
• Sell evergreen SKUs on pre-order to avoid running out
• Set wider estimated pre-order shipping dates for greater flexibility

1. Keep SKUs online through logistical challenges with pre-orders

Whether it's moving fulfillment centers or sourcing new materials, the tariffs are creating supply chain challenges for many brands. Those challenges may require inventory to be taken offline — unless it's available for pre-order.

Purple Dot's recommendation: Shift all impacted SKUs to pre-orders. That way, you don't have to take them offline and stop selling.

Two of our apparel customers are in the process of moving warehouse operations to another country, a time-consuming and expensive undertaking. By shifting all the impacted SKUs to pre-orders, the brand is still able to sell rather than taking them offline for two to three weeks. Pre-orders keep everything moving efficiently, keeping customers (and the brand's finance team) happy.

2. Sell evergreen SKUs on pre-order to avoid running out

Securing alternate production facilities can take months. This creates delays for you (and the customer) whether the item is a new launch or an evergreen SKU with ongoing production. 

Purple Dot’s recommendation: Sell evergreen SKUs on pre-order. That way, you’ll never be out of stock.

Because of evergreen SKUs’ consistent ordering, you likely know when they’ll arrive. Tariffs can create timeline ambiguity so setting up new waitlists limits listing gaps and customer confusion, keeping revenue flowing despite uncertainty. Our data shows no material drop in conversion between pre-orders and in-stock items. This approach helped Knockaround achieve 60% sell-through before their products arrived at the warehouse.

3. Set wider estimated pre-order shipping dates for greater flexibility

Temporarily holding pre-order inventory offshore allows you to assess ongoing tariff developments. You can also continue to take orders as pre-orders without landing product. Similarly, pre-orders give you the opportunity to hold onto inventory that you may have in stock now, but would prefer to ship later to avoid tariffs.

Purple Dot’s recommendation: Set wider projected pre-order ship dates of one to two months out. That way, you’ll have more flexibility to meet customer expectations.

Some brands that use Purple Dot have pushed back their pre-order ship dates in order to land the inventory at a more optimal time. By continuously taking orders, they can maintain revenue and increase demand while holding the inventory offshore.

Widening projected ship dates gives you more control of the customer experience. That makes clear communications a must. Purple Dot provides automated communications around ship dates and delays, increasing transparency and building trust that your doors are open and you will continue to sell the products they love

Mitigate tariffs with Purple Dot

The impact tariffs have on a brand can be a challenge, but it's also an opportunity to innovate and adapt. Pre-orders can keep sales flowing, maintain customer loyalty, and support your operational shifts throughout this uncertainty.

We're here to help every step of the way, ensuring that your brand is not just surviving but thriving. Even when pre-order funds are held in escrow, we can offer an early advance to a portion of the funds, allowing you to act quickly during this uncertain time.

Book a call to talk through implementing these tactics at your brand, or discuss any other approaches you're curious about, here.

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