PRETAILWhy consumers now love to SHOP for products and services at concept stage.

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* PRE-TAIL is a registered trademark of The Integer Group. Used with kind permission.

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Definition

A mode of consumption that sees consumers treat crowdfunding platforms as the new shopping malls. Why? Because that’s where current consumer demand for more innovative, exciting and unique products and services is being served better than anywhere else, by an army of entrepreneurs and start-ups.

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.

Data from market-leader Kickstarter confirms the incredible growth and global scale of crowdfunding:

In 2012, donations & reward-based crowdfunding (of which PRETAIL is a part), grew 85% to USD 1.4 billion (Massolution, April 2013)

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1. THE EXPANDING GLOBAL BRAIN

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 it to do 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.

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2. PERFECT MARKET FIT

Here’s what is fueling PRETAIL, in more detail:

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: Magic Cooking Gloves, successfully funded in January 2013.

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3. INSTANT TRUST

Here’s what is fueling PRETAIL, in more detail:

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.

Pictured: France-based Overade’s folding bicycle helmet, successfully funded in February 2013 on Ulule.

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4. FROM PRETAIL TO ETAIL TO RETAIL

Here’s what is fueling PRETAIL, in more detail:

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.

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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.

PRETAIL in South & Central America (SCA)

PRETAIL in Asia Pacific

PRETAIL AROUND THE GLOBE

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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.

Crowd Supply: A PRETAIL platform and an etail store

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.

Christie Street: Crowdfunded hardware platform that aims to help inventors

Examples //PRETAIL PLATFORMS

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:

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Founded in 2009, but worth revisiting for this briefing, Quirky was a pioneer of what it terms ‘socially developed products’. Product creators submit their idea to the Quirky user community, who can suggest changes. Next, users vote on the best product ideas, and – based on these votes and other factors – Quirky staff choose a number of products to go into production. Stem, a device that allows the user to spay juice straight out of a citrus fruit, retails on Quirky for USD 4.99.

Quirky: Store for “socially developed products”

Wrappled (launched February 2013), Outgrow.me, and Tiny Light Bulbs are online storefronts for products that have reached their funding target on crowdfunding sites such as Kickstarter, Indiegogo and others. By aggregating successfully funded products, these sites inhabit the space where PRETAIL merges with conventional etail. The NanoLeaf LED lightbulb – which makers claim is the most energy efficient lightbulb in the world – had raised over USD 270,000 on Kickstarter by March 2013 (against a target of USD 20,000), and is now available to pre-order via Outgrow.me.

Outgrow.me, Wrappled & Tiny Light Bulbs: One-stop shops for successfully crowdfunded products

PRETAIL PLATFORMS

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Make That Thing, launched in February 2013 by TopatoCo, a web comic merchandise etailer, aims to help creatives handle the fulfillment side of successful crowdfunding initiatives. One of the first service’s projects was a print version of The Tomorrow Girl: Dresden Codak (a popular web comic) that raised over USD 530,000 from 7,565 backers.

Make That Thing: Production agency for crowdfunded projects

PRETAIL PLATFORMS

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In November 2012, Singapore-based digital comic book Dim Sum Warriors successfully raised over USD 18,600 on Kickstarter, allowing the team to publish its first print graphic novel. The books are now available in both US and Singaporean bookstores and comic shops.

Dim Sum Warriors: Kickstarter project available in Singapore bookstores

During December 2012, a total of 5,622 Kickstarter backers pledged USD 419,472 – far surpassing the initial goal of USD 50,000 – for a WakaWaka Power, a pocket-sized solar powered station capable of charging smart phones and tablet devices after one day of sunlight. WakaWaka plan to manufacture the charger parts in earthquake-hit Haiti, donating one WakaWaka solar powered lamp to the local community for every power station purchased.

WakaWaka Power: Solar powered charger and LED light

Examples //PRETAIL PRODUCTS Now, clearly there are many thousands of PRETAIL products currently (or soon to be) available to buy

online if not in stores. So here’s just a small selection of some that have been delighting customers:

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The Good Night Lamp is a family of wifi-connected lamps where, when the larger model is turned on and off, the companion lights also turn on and off in unison, wherever in the world they are located. Despite the Good Night Lamp failing to reach its financial target on Kickstarter in January 2013, the product attracted enough attention to proceed to production. Orders are scheduled to ship in September 2013.

Good Night Lamp: Wifi-connected lamp turns on and off companion lamps in unison, no matter where they are located

Developed to promote responsible drink driving in the US, the Breathometer transforms smartphones into breathalyzers. The portable plug-in device fits into any smartphone’s headphone socket and, when blown into, alerts the user to their blood alcohol concentration through the app. To the end of March 2013 over 3,000 consumers had pre-ordered the Breathometer on Indiegogo, with shipping due to begin in July 2013.

Breathometer: A smartphone breathalyzer

PRETAIL PRODUCTS

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SOCCKET, a portable generator that doubles up as a soccer ball, attracted over 1,094 backers and exceeded its USD 75,000 funding goal on Kickstarter during March 2013. During play, the ball captures and stores kinetic energy, that can be used to power the included single-bulb LED lamp. SOCCKET is currently available for pre-order through the brand’s website.

SOCCKET: Soccer ball generates power as it’s played with

January 2013 saw Календарь «Новое слово каждый день» (Calendar: A New Word Every Day) successfully achieve its funding goal on Boomstarter, a Russian version of Kickstarter. Created to help preserve the Russian language, the calendar aims to educate buyers on the etymology and meaning of Russian words.

A New Word Every Day: Calendar celebrates Russian language

PRETAIL PRODUCTS

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During March 2013, customizable electronic guitar brand IG Guitars was successfully crowdfunded via Kickstarter. 40 backers pledged more than USD 350 each to create personalized instruments with interchangeable magnetic panels (saving a third on the retail price) and receive official certificates and bonus merchandise. The guitars are scheduled to ship in July 2013.

IG Guitars: Customizable designer guitars

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PRETAIL PRODUCTS

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Fashion designer and Project Runway finalist Alicia Hardesty collaborated with a quantum physicist and a neuroscientist on Project X Squared, a versatile capsule clothing collection that includes a lightweight lab coat designed to be worn outside the laboratory. As of mid April 2013 the project had attracted over 285 backers, with shipping estimated for July 2013.

Project X Squared: Project X designs lab coats for everyday wear

Karma Chakhs were successfully funded on German crowdfunding platform StartNext in January 2013. Le Van Bo-Mentzel, a Laotian-German furniture designer, started the project as a result of his disappointment at Nike’s purchase of Converse, as now the brand’s iconic Chuck Tailor sneakers are produced by a large multinational with ‘bad karma’. Instead, Karma Chakhs will be produced by Fair Trade-certified manufacturers. Nearly 400 people PREchased the shoes (at cost price only), enabling production to start. The shoes are due for delivery in July 2013.

Karma Chakhs: Ethical ‘alternative’ to Converse produced by Laotian-German furniture designer

PRETAIL PRODUCTS

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In Taiwan, many families own a traditional funeral ritual book, which documents and records the highly ritualistic practice of mourning the deceased. Many current versions do not follow the traditions accurately, which inspired Taiwanese professor Xu Fu Quan to create a correct version. In June 2012, his project – an updated edition of Taiwanese customary funeral rites, written for modern audiences – was successfully funded on ZecZec (a Taiwanese crowdfunding site).

Family Rituals: A traditional funeral ritual manual, updated for modern Taiwanese families

Two Brazilian cycling enthusiasts created Motriz, a shelf that doubles as a wall-mounted bike rack, that successfully reached its funding goal on Brazilian crowdfunding site Catarse.me in January 2013.

Motriz: Design-inspired shelf that doubles as a bike display

PRETAIL PRODUCTS

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IMPLICATIONS and OPPORTUNITIES

Anything that delights (jaded, saturated, blasé) consumers needs to be on your radar. And PRETAIL definitely touches a few buttons. So how can any (your?) brand become a PRETAILER?

• Give up on secrecy. No, you don’t want to share everything with the world and thus your competitors, but why not open up your R&D, and let consumers PREchase ideas that are in the pipeline. Worried about competitors running with your inventions? Then just make sure you have so many of them that they will never be able to keep up.

• And yes, get consumers to present you with the ideas they want to be able to PREchase. PRETAIL initiatives will also support your traditional sales channels. Building a community of enthusiastic supporters will only help whip up excitement among other, more mainstream consumers too.

• Partner with an existing creator/inventor/start-up to co-present a concept for PREchase. Or set up your own branded platform, where creators can post their own ideas in a particular niche (read: you and your customers’ niche).

• Look at the traditional retail landscape, and think how this will be mimicked in the PRETAIL arena: there’s likely to be a Walmart or Amazon-style mega-mall (that aggregates all the ideas being peddled on the hundreds of crowdfunding platforms worldwide), as well as destination stores (who’s going to create the first luxury PRETAILER, the first curated homeware PRETAILER, and on and on?).

Oh, and while you dive into PRETAIL and embrace the GLOBAL BRAIN and concepting and more, we’ll be hard at work PREparing our next Trend Briefing. If you’re not subscribed

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