Ask HN: Testing the market before manufacturing the product?

In the 70's, shrewd book publishers would take out ads in the back of magazines for books they had not written. If they got more than 300 orders, they would write the book in a week. Otherwise, they would mail back the checks and say: "Sorry, it's out of stock."

This is according to Marc Andreessen, when he was on Charlie Rose, (http://bit.ly/marca).

You have an idea for a physical good that you think a sufficient number of people would be interested in. How do you perform the analogous process on the internet, when selling a physical good? Step 1. Mock up an image of it, and set up a website. Step 2. ... Step 3. Take pre-orders. Step 4. PROFIT! (or, return everyone's money if there aren't enough orders) Step 5. Manufacture.

What is Step 2?

What merchant solution should you use to take pre-orders? Can you use PayPal for this sort of setup? Or someone else?

How do you promote this product? Besides Google AdWords, what are other cheap promotion methods for testing the market? Trying to get a link on digg.com?