Transform your brand with the preorder model
Banana XYZ
Creator Resources

Transform your brand with the preorder model

January 11

We are positively passionate about the preorder model and all the advantages it possess - enough to build a business around it, enough to fill a blog post about it, and here are our top 5 reasons why.

1. Death of Deadstock

The preorder model eliminates a colossal chain effect of logistical complications that traditionally come hand-in-hand with starting a product business. This logistical complication starts with manufacturing in quantities and sizes that nobody knows will sell, the stock gets shipped to live in a warehouse where systems and manpower are needed to manage this inventory ie. picking and packing orders and handling returns. No matter how many discount sales a brand can do there will inevitably be deadstock - which is inventory that has never sold and has become obsolete. Deadstock is bad for business because it's expensive. It ties up capital, impacts revenue, increases carrying costs and takes up valuable warehouse or shelf space. Eventually these will end up in landfill, or worse, be incinerated. Alas with preordering, zero inventory is possible.

2. Financial Security

Believe it or not but the logistical chain effect of having inventory is one of the most significant costs of running a product-based business - and the doom of many. It is expensive from the beginning as manufacturing in bulk is a huge investment (and risk!) in itself. The whole life cycle of inventory is expensive as every action as well as inaction costs. With the preorder model, funds to manufacture will have already been raised through the preordering process with 100% sell-through and zero unsold inventory leftover. Every product made is being made because it has already sold.

Why aren’t we advocating for handmade, bespoke goods then, you ask? Bespoke goods are fantastic in their own right, but for most people they are too expensive and sadly unaffordable. Preorders, on the other hand, are still small-batch production with plenty of character and they are significantly more affordable - exactly why we believe it is the future of consumerism, especially for fashion. 

3. Ethical Sustainability

We believe in shopping mindfully because everything we consume costs our environment. In fact, traditional factories that still rely on fossil fuels generate an average of 23 kilograms of greenhouse gases for every kilogram of fabrics made, according to McKinsey Analysis. While more than 100 billion articles of clothing are produced each year globally, nearly 20% of them going unsold - that’s a chilling 20 billion garments worth of deadstock a year. What’s worse, 92 million tonnes of these finished clothing end up in landfill, excluding off-cuts and other collateral fabric waste in the process of manufacturing. Many countries are working hard on improving their fabric and clothing recycling but the task at hand is of mammoth scale. Without tackling the root issue of overproduction, recycling will always only manage a scratch of the iceberg.

Through the preorder model, Banana is eliminating this problem first hand, at the source.

4. Unleashes creativity

Creative ideas are freed from logistical labyrinths, financial woes and environmental guilt with preorder models. With the set-up cost being as little as sampling, creatives can afford to materialise all their big ideas just to see what works with customers and what does not. The preorder model provides so much more room for creative experimentation and autonomy compared to traditional fashion businesses, which consists of guess work and subjective approvals by teams of buyers and merchandisers who decide what hits the shelves and what does not. With the preorder model, designers can take back control of their narrative. 

5. Open dialogue with customers

The preorder mechanism in other words is a direct feedback from the audience, or customer - like a voting system, or an open feedback loop that traditional supply chains would have no room to accommodate for. With open access to customers, designers will no longer need teams of buyers and merchandisers to gauge customer interest or shopping intent. All that will be happening in real time, online, at their own fingertips. Many brands have already successfully pivoted into the preorder space, as it is clearly a great channel for market testing and forecasting with very little investment. Just look at the success of the Trunkshows by Moda Operandi, which still makes up roughly 20% of their total profit today.

At Banana, we have space for established brands who wish to do the same, to pivot their business into the new age. We offer the same support and flexibility as we would for independent creators. If this sounds interesting to you, find out more here or contact us to get started.