Pretail

Last updated

Pretail (also referred to as pre-tail, pre-retail, pre-launch, or pre-commerce) is a sub-category of e-commerce and online retail for introducing new products, services, and brands to market by pre-launching online, from creating an interest waitlist of signups before launch to collecting reservations or pre-orders in limited quantity before release, realization, or commercial availability. [1] Pretail allows new product ideas/prototypes to be mass produced only when they have reached an initial threshold of buy-in from investors/consumers.  [2] Pretail includes pre-sale commerce, pre-order retailers, pre-launch marketing services, incubation marketplaces,  crowdfunding communities, and demand chain management systems.

Contents

Pretail results in marketing efficiency, margin efficiency (cutting down on the middlemen like physical retailers or distributors), and product efficiency (getting direct feedback from potential customers fosters innovation and eliminates guesswork). [2]

Retailers today are increasingly pretailing to test, promote, and monetize consumer demand in the initial phase of the new commerce pipeline as first introduced in a 2012 Forbes article. [2] Some examples are: Tesla’s model 3 pre-order or VR gaming headset Oculus Rift funded through Kickstarter. Consumers engaging in pretail are known as an early adopter, fan, backer, supporter, or presumer (pre-launch consumer).

Growth

Pretail demand is growing in consumer retail: electronics, movies, music, video games, books, fashion, software apps, connected devices, cars, toys, cosmetics, art, events, etc. [3] This trend is being driven by companies to enhance new product development, better organize product releases, lower market risk, and increase early fan adoption. [4] Large companies such as Amazon and Apple are pre-tailing new products to measure demand, manage supply chain market dynamics, and monetize fandom anticipation.

Entrepreneurs and small companies are embracing crowdfunding platforms such as Kickstarter and Indiegogo before product realization to fund manufacturing, test product-market fit, test market demand, pricing and take pre-orders to build a demand and fandom community. [2] Consumer involvement with products and services pre-launch is becoming mainstream according to industry experts on consumer behavior trends. [5]

Differencies with other forms of commerce

Pretail is related to a wide variety of business areas: from product innovation (concept & ideation) and supply chain management to marketing and sales. The aim of pretail is to build customer awareness and get sufficient financing to start product development. Pretail is future-oriented and is usually implemented using crowdfunding platforms, controlled media channels, mass media, and social networks. [2]

Pretail as a competitive advantage

Evolution of consumer preferences

The tendency of consumers to increasingly value the experience associated with a process of purchasing gives rise to experiential buying - creating a memorable buying experience. Pretail provides a sense of belongingness that customers perceive as important. Crowdfunding platforms make consumers feel that they are part of a community that consists of people who are interested in the particular product or service. Consumers thus consider the product as "the first", "the newest", "the one that I helped launch". Pretail is gaining popularity as it satisfies the demand for novel products which are of high consumers` interest nowadays. [6]

Market evaluation tool

Pretail allows innovators to test their product-market fit with a Minimum Viable Product (MVP) equivalent. Thanks to pretailing risks associated with launching a product - financing and manufacturing are thus reduced. In addition to this, more people can participate in the project as investors or salesmen. By testing the demand for the project entrepreneurs can lower perceived and actual risks associated with launching a product and starting a company. By using pretail model companies can match supply and demand trends before they actually start producing a product. It is the framework that serves for connecting increasingly demanding consumers and entrepreneurs. However, using pretail model for launching does not guarantee success of the product or enterprise, not all pretailers become e-tailers. Some services and products never take off, while others receive strong indications of market demand, receive large volumes of pre-orders, and raise the capital needed for starting manufacturing. Those kinds of services or products are the ones that succeed to become e-tailers. [6]

Supply chain and finance

Product development costs are pushed down, more and more people can start their own business, create goods, and provide services to broader audiences. By being able to measure demand before mass production is started allows companies to forecast financing needed and develop inventory policy more accurately. [6]

Successful examples

Opal Nugget Ice Maker

Opal Nugget Ice Maker is a specialized ice maker which collected more than $2.7 million on the Indiegogo.

This ice maker freezes water in a special way. Rather than freezing the water directly, the ice maker scrapes flakes away from the cylinder, and through that process creates a lot of chewable ice nuggets. This type of ice making is often used in upscale cocktail bars or fast-food chains. However, machines used there are usually big and expensive. That is the reason why this project collected such a substantial amount of money. [7]

Oculus Virtual Reality Headset

Oculus Headset is a virtual reality set that was initially started by Palmer Luckey as a side project. In 2014 the company was acquired by Facebook for $2 billion. One of the reasons for this acquisition was the apparent public interest in this type of technology which was shown two years earlier when the campaign on Kickstarter managed to raise a total of $2.4 million when the project was still in the prototype stage. [8]

Glowforge Laser Marker, Engraver and Cutter

Glowforge laser marker, engraver and laser cutter has a successful and unique pretail story[ citation needed ]. Unlike many other projects, it attracted a substantial amount of capital without big platforms such as Kickstarter or Indiegogo. With a team of only 14 people, the company went from an unknown startup to a popular enterprise that raised $28 million during its self-run campaign.

Glowforge has been awarded three Make Editor’s Choice Awards at the World Maker Faire event in New York. [9]

See also

Related Research Articles

E-commerce is the activity of electronically buying or selling of products on online services or over the Internet. E-commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. E-commerce is in turn driven by the technological advances of the semiconductor industry, and is the largest sector of the electronics industry.

Retail Sale of goods and services from individuals or businesses to the end-user

Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholesaler, and then sells in smaller quantities to consumers for a profit. Retailers are the final link in the supply chain from producers to consumers.

Disintermediation Eliminating middlemen

Disintermediation is the removal of intermediaries in economics from a supply chain, or "cutting out the middlemen" in connection with a transaction or a series of transactions. Instead of going through traditional distribution channels, which had some type of intermediary, companies may now deal with customers directly, for example via the Internet.

<span class="mw-page-title-main">Online shopping</span> Form of electronic commerce

Online shopping is a form of electronic commerce which allows consumers to directly buy goods or services from a seller over the Internet using a web browser or a mobile app. Consumers find a product of interest by visiting the website of the retailer directly or by searching among alternative vendors using a shopping search engine, which displays the same product's availability and pricing at different e-retailers. As of 2020, customers can shop online using a range of different computers and devices, including desktop computers, laptops, tablet computers and smartphones.

The NPD Group Market-research company

The NPD Group, Inc. is an American market research company founded on September 28, 1966, and based in Port Washington, New York. In 2017, NPD ranked as the 8th largest market research company in the world, according to the independent AMA Gold Report Top 50 report. The NPD Group operates in 20 countries, across more than 20 industries.

A pre-order is an order placed for an item that has not yet been released. The idea for pre-orders came because people found it hard to get popular items in stores because of their popularity. Companies then had the idea to allow customers to reserve their own personal copy before its release, which has been a huge success.

Direct-to-consumer (DTC) or business-to-consumer (B2C) is the business model of selling products directly to customers and thereby bypassing any third-party retailers, wholesalers, or any other middlemen. Direct-to-consumer sales are usually transacted online, but direct-to-consumer brands may also operate physical retail spaces as a complement to their main e-commerce platform in a clicks-and-mortar business model.

Pop-up retail Retail tactic of opening shops for short periods

Pop-up retail, also known as pop-up store or flash retailing, is a trend of opening short-term sales spaces that last for days to weeks before closing down, often to catch onto a fad or scheduled event.

<span class="mw-page-title-main">Kickstarter</span> US-based crowdfunding platform

Kickstarter is an American public benefit corporation based in Brooklyn, New York, that maintains a global crowdfunding platform focused on creativity. The company's stated mission is to "help bring creative projects to life". As of July 2021, Kickstarter has received $6.6 billion in pledges from 21 million backers to fund 222,000 projects, such as films, music, stage shows, comics, journalism, video games, technology, publishing, and food-related projects.

Indiegogo American crowdfunding website

Indiegogo is an American crowdfunding website founded in 2008 by Danae Ringelmann, Slava Rubin, and Eric Schell. Its headquarters are in San Francisco, California. The site is one of the first sites to offer crowd funding. Indiegogo allows people to solicit funds for an idea, charity, or start-up business. Indiegogo charges a 5% fee on contributions. This charge is in addition to Stripe credit card processing charges of 3% + $0.30 per transaction. Fifteen million people visit the site each month.

India has an Internet user base of about 636.77 million as of May 2020, about 40% of the population. Despite being the second-largest user base in world, only behind China, the penetration of e-commerce is low compared to markets like the United States, or France, but is growing, adding around 6 million new entrants every month. The industry consensus is that growth is at an inflection point.

The Grommet is an online marketplace and product discovery platform based in Somerville, Massachusetts for consumer products from maker culture, inventors, entrepreneurs, and small businesses. It was founded in 2008 by CEO Jules Pieri and Chief Discovery Officer Joanne Domeniconi after careers at Continuum, Keds, Playskool, and Stride Rite. They find and review products and select certain ones to be promoted on their web site. They present a new product every weekday with an editorial and video story. Members of the web site then give feedback on the product. Many of their products were initially funded on the crowdfunding platforms IndieGogo or Kickstarter. The Grommet sees itself as a next step after crowdfunding success to help new businesses get launched.

X5 Group is Russia's largest food retailer.

Crowdfunding is the practice of funding a project or venture by raising money from a large number of people, typically via the internet. Crowdfunding is a form of crowdsourcing and alternative finance. In 2015, over US$34 billion were raised worldwide by crowdfunding.

Simon Tian

Simon Tian is a Canadian businessman, inventor, entrepreneur and investor. He is the co-founder and CEO of Fonus, founder and chief executive officer (CEO) of Neptune, and co-founder of Globle. Born and raised in Montreal, Canada, Tian dropped out of pre-university college at the age of 17 to start Neptune, and, as of late 2017, has raised around $7 million from private investors as well as a total of more than $2 million from crowdfunding sources alone. Tian is a 2015 Thiel Fellow, having been awarded $100,000 by PayPal co-founder and venture capitalist Peter Thiel through the Thiel Foundation, and was named one of the top 30 Quebecers under 30 by Les Affaires in 2014.

Neptune (company)

Neptune Computer Inc., commonly known simply as Neptune, is a Canadian privately held consumer electronics and wearable technology company founded in 2013 by Simon Tian in Montreal, Quebec, and currently based in Toronto and San Francisco. As of late 2017, the company has raised around $6 million from private investors as well as a total of more than $2 million from crowdfunding sources alone.

Crowd Supply is a crowdfunding platform based in Portland, Oregon. The platform has claimed "over twice the success rate of Kickstarter and Indiegogo", and partners with creators who use it, providing mentorship resembling a business incubator.

Everykey

Everykey designs and builds a patented universal smart key that can unlock devices and log into online accounts on those devices. The idea began as an entrepreneurship class project at Case Western Reserve University.

<span class="mw-page-title-main">Impact of the COVID-19 pandemic on the fashion industry</span> Impact of COVID-19

The COVID-19 pandemic affects the global fashion industry as governments close down manufacturing plants, and through store closures, and event cancellations to slow the spread of the virus. The coronavirus pandemic has had a major impact on fashion brands worldwide. At the same time, the fashion industry faces challenges in consumer demand. New opportunities are also presenting themselves as fashion brands shift to making fashionable coronavirus face masks. The ongoing COVID-19 pandemic is inevitably changing the fashion world forever. Domenico de Sole, chairman of Tom Ford International, remarked that “I have seen a lot of difficult situations in my long career and this has been the most devastating event, not just for fashion and luxury, but all industries.”

References

  1. ↑ Pretail Lexicon, Financial Times .
  2. 1 2 3 4 5 Hartley, Scott. "Pre-Tail, E-Tail, to Retail: The New Commerce Pipeline", Forbes , September 7th, 2012.
  3. ↑ Trend briefing report, "Pretail: Why consumers now love to shop at the concept stage", Trendwatching.com, June 2013
  4. ↑ Gansky, Lisa. "The Rise of Pre-Commerce: The sharing economy and crowdfunding have fundamentally altered the way we develop products", FastCompany , April 25th, 2013
  5. ↑ Trend briefing report, "Presumers: The product, the story, the status: why consumer involvement with products and services pre-launch is set to go mainstream", Trendwatching.com, November 2013
  6. 1 2 3 Dao, Linh (2016-11-29). "Why You Should Care About Pre-Commerce Now". Medium. Retrieved 2020-06-09.
  7. ↑ Morris, Chris (2016-09-22). "The all-time biggest wins on Indiegogo". CNBC. Retrieved 2020-06-09.
  8. ↑ Robinson, Ryan. "5 Crowdfunded Side Projects That Became Million-dollar Companies". Forbes. Retrieved 2020-06-09.
  9. ↑ Hurst, Samantha (2015-10-24). "Glowforge 3D Laser Printer Successfully Secures Nearly $28M During Self-Running Crowdfunding Initiative". Crowdfund Insider. Retrieved 2020-06-09.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.