In our Trend Briefing on PRESUMERS, we highlighted how many consumers are clamoring to support, be involved with, and fund products and services pre-launch, fueling a burgeoning crowdfunding movement.
Now make way for a little less consumer involvement, and more straightforward shopping in the pre-launch arena, i.e. PRETAIL*.
PRETAIL: A mode of consumption that sees consumers treat crowdfunding platforms as the new shopping malls. Why? Because that's where current consumer demand for the most innovative, exciting and unique products and being served better than anywhere else, by an army of entrepreneurs and start-ups.
* PRE-TAIL is a registered trademark of The Integer Group. Used with kind permission.
In 2012, donations & reward-based crowdfunding (of which PRETAIL is a part), grew 85% to USD 1.4 billion (Massolution, April 2013).
Data from market-leader Kickstarter shows the incredible growth and global scale of crowdfunding:
Here’s what is fueling PRETAIL, in more detail:
Crowdfunding has unleashed the GLOBAL BRAIN (the collective creativity, entrepreneurialism and intelligence of thousands of individuals and start-ups around the world) on consumerism.
And via the mechanism of funding pre-realization, those platforms mean that anyone with an idea can present that idea to consumers, who can then PREchase it.
For the first time ever, then, the diversity, inventiveness, and sheer number of innovations on offer in the consumer arena can actually match the imaginings of consumers. That’s a crucial new equality of supply and demand: one that did not exist when consumption happened in traditional offline/online stores.
Next? That would of course be consumers pro-actively suggesting to the GLOBAL BRAIN what it is they would like to see introduced/built. And then some of them may try to do it themselves, resulting in the ultimate convergence of by and for. Just look at MakeThatThing.com below. And if that reminds you of co-creation, or CUSTOMER-MADE, you’re right, but keep in mind co-creation was always more about brands seeking ideas/help from consumers, while this time it will truly be about consumers demanding what they want from entrepreneurs/ the GLOBAL BRAIN.
Pictured: Magic Cooking Gloves, successfully funded in January 2013.
Consumers indulging in PRETAIL are driven by the thrill of being early, mixed with the thrill of finding a truly exciting or useful or relevant product, especially if it’s something quirky or so niche that it would have never made it down a traditional brand’s production line.
And because the aforementioned GLOBAL BRAIN can present an endless array of innovations to consumers, at near zero cost and zero risk, the PRETAIL market is near infinite.
Furthermore, as consumers will only PREchase the innovations they want – and so ensure those ideas are realized* – and ignore those they don’t want, it’s as close to a perfect market as economists can imagine.
* Also, the instant feedback from eager PRESUMERS helps innovators see very rapidly whether or not their product idea is serving the desires of consumers. This feedback helps them tweak their product idea, and can help ensure that even initially-wide-of-the-mark products are a perfect fit when they are realized.
Pictured: France-based Overade's folding bicycle helmet, successfully funded in February 2013 on Ulule.
The trust barriers that would once have stopped consumers from embracing PRETAIL are fast being eroded to nothing.
In a consumer arena made transparent by online connectivity, there is no hiding place for creators who fail to meet their promises. Consumers know this, and they know that creators know.
That means consumers can have FUTURE FAITH* that most creators will deliver the products/services they are promising. Yes, that leaves room for some risk. But consumers will accept the tiny risk of all-out loss as a part of PRETAIL. Even if an innovator does disappear with their money, the abandoned PRETAILERS find themselves part of a ready-made community committed to the funding of a particular product: they can simply find another entrepreneur to serve their pre-built demand. (And the community is bound to go after the original (non)-creator, too ;-)
* See our Trend Briefing on CLEAN SLATE BRANDS for more on FUTURE FAITH.
The next (and final) step for successful PRETAIL products: becoming absorbed by traditional, mainstream retail.
In fact, the new breed of PRETAIL sites (such as Christie Street and Crowd Supply featured below) are already blurring the boundaries between PRETAIL and retail by making it easy for customers to buy successful projects, even long after they’ve reached their funding targets (by comparison Kickstarter doesn’t offer any e-commerce facilities, requiring customers to track the products down elsewhere).
And we’re already seeing products make the leap from crowdfunding platforms all the way to physical retail, on a global scale too: witness the Dim Sum Warriors comic book below, launched on Kickstarter, now available in Singaporean book stores.
So watch out for the first true PRETAIL smash hit, bought (instantly) by millions of consumers, from ‘normal’ stores, with most not knowing, or indeed even caring about its backstory.
Pictured: The tsaiclip, which following a successful Kickstarter campaign in 2011, is now stocked by retailers in the US, France and Hong Kong.
While there are PRETAIL products succeeding in SCA (witness the Motriz bike shelf example below), this remains a niche trend in the region for two main reasons. First, many (less-experienced) consumers still find thrills in buying new products the traditional way, as they haven’t been deeply immersed in years of hyperconsumption. Second, thanks to SCA’s strong collective social culture, the crowdfunding arena is more focused on projects that benefit society, rather than being a significant PRETAIL destination. Yet ;-)
Many Asian consumers, especially in China, don’t have high levels of confidence in e-commerce transactions. Which is why one of leading Chinese payment provider Alipay’s key innovations was the practice of holding funds in escrow until both parties are satisfied. Overcoming these fears, and convincing often-skeptical customers to PREchase products – that haven’t even perhaps been manufactured yet – will be key for any aspiring Asian PRETAILER.
When in September 2012 Kickstarter tried to move away from becoming a PRETAIL destination with its ‘Kickstarter is not a store’ blog post (which announced tightening listing rules to protect buyers from unfinished and unrealistic projects), other sites quickly stepped in and positioned themselves as PRETAIL facilitators and shopping destinations:
Launched in December 2012, Christie Street is a product-focused crowdfunding platform which aims to make PREchasing near risk-free. Creators who submit an idea to the site are audited to ensure they are legitimate, and their idea feasible. Meanwhile, funds are released to creators in stages, ensuring project supporters can receive a partial refund if a funded product fails to materialize. As of April 2013 the DoorBot, a wifi-enabled doorbell that streams video to a smartphone or tablet, had received funding of USD 395,660 (against a target of USD 250,000), and is due for delivery in July 2013.
Launched in March 2013, Crowd Supply partners with product creators, offering advice on a suitable funding target and production logistics, and allowing site users to PREchase ideas. Meanwhile, creators who have already crowdfunded their products – on Crowd Supply or elsewhere – can make their product available for pre-order or conventional purchase. In April 2013, Pakems Foldable Boots, a lightweight boot designed to be easy to carry while skiing, were available to buy from USD 60.